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Industry Practice · Construction & property

Engineering & EPC Contractors

Insurance for engineering procurement & construction firms, design liability, project execution risk, equipment and contractual exposure.

Design & engineering errorsErection & commissioning damageProject delay & LD exposure
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The sector

EPC engagements compound design liability with construction liability.

EPC contractors carry the most complex liability profile in the construction supply chain: design responsibility (where errors in calculations or specifications create long-tail claims), construction execution risk (CAR/EAR perils) and contractual liability under sophisticated EPC contracts that can extend defects liability for years. Each layer needs its own cover.

Risk profile

Where the exposure lives.

EPC contracts carry erection, testing, delay-in-start-up and defect liability across the build. These four lead.

01
Design & engineering errors
Calculation, specification or drawing errors that cause structural or performance failures, long-tail claims under PI.
02
Erection & commissioning damage
Damage to equipment during erection, testing and commissioning, covered under EAR with proper section breakdown.
03
Project delay & LD exposure
Delayed mechanical completion exposes the EPC contractor to liquidated damages and contractual penalty under the EPC contract.
04
Equipment in transit & on site
High-value imported plant during ocean and inland transit, then on the project site through to handover.
Recommended cover

The programme we typically place.

Each cover below is a link to the policy page. The combination, the limits and the wording are what we negotiate on your behalf.

01
Contractor's All Risk
CAR/EAR cover with proper section breakdown for erection, testing and commissioning.
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02
Marine Insurance
Marine cover for imported plant with through-transit clauses to project site.
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03
Workmen Compensation
EC Act for project workforce including sub-contractors on principal-employer basis.
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04
Public Liability
Project liability with cross-liability and adjacent-property extensions.
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Claim reality

What a claim tends to look like here.

On an EPC contract a common claim is damage or defect during erection and testing, or a delay in start-up that pushes back the client's revenue. A single testing failure can cascade into a delay claim under the contract.

Questions

Questions we get in this sector.

CAR is for civil construction works; EAR is for the erection and testing of plant and machinery. Many EPC projects need both, and we structure the split so nothing falls between them.
Yes, delay in start-up or advance loss of profits cover responds to the revenue lost when an insured damage event delays completion. It must be arranged at the outset and matched to the contract's milestones.
Whichever predominates. Erection all risk leads where the value is in plant and machinery being installed; contractors' all risk leads where it is in civil work. Getting this the wrong way round changes what is covered, and it is settled before approaching the market.
Not as standard. Advance loss of profit covers revenue lost when commissioning is pushed back by an insured event, and on a project financed against a commissioning date it is frequently more important than the material damage cover.
Yes, and it is often required by the contract. Where the contractor carries design responsibility, a design defect is a professional liability rather than a construction one, and the construction policy does not answer for it.

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