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Erection All Risk

Project cover for the erection and installation of plant and machinery, running from delivery to site through to testing, commissioning and the maintenance period. Distinct from Contractor's All Risk, which is written for civil works: an EAR policy is rated on the erection value and carries testing and commissioning as its defining exposure.

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Coverage at a Glance
Erection & Installation

Plant and machinery from site delivery onward

Testing & Commissioning

The phase where most EAR losses actually occur

Third-Party Liability

Injury or damage to others at the project site

Maintenance Period

Extended cover after handover

ErectionValue Rated
T&CCover Core
TPLIncluded
MaintenanceExtendable
Coverage

What erection all risk covers

Cover for plant and machinery during erection, testing and commissioning, from arrival on site until the works are handed over.

The works during erection
Physical loss or damage to the plant being erected, from any cause not excluded, for the whole erection period. Written on an all risks basis rather than against named perils.
Testing and commissioning
The period when the plant is first run, which is when a large share of erection losses actually occur. The testing period is stated in the policy and is often too short for complex plant.
Third party liability on site
Injury to people and damage to property outside the contract works arising from the erection, which on a site adjoining a working factory is a live exposure.
Surrounding property
Existing property of the principal in or around the site, which is not part of the works but can be damaged by them. Included by extension and routinely left out.
Maintenance and defects liability
The period after handover during which the contractor remains responsible. A visits-only or an extended maintenance basis, and the tender usually specifies which.
Debris removal and expediting costs
Clearing a failure and the extra cost of air freight or overtime to keep the programme, both of which are ordinary consequences of a mid-erection loss.
Advisory approach

Read the tender before placing the policy

On this cover the requirement is usually written down somewhere before anybody speaks to an insurer. The tender or the contract states what cover is needed, for what period, in whose name, and often the limit. Placing a policy without reading it produces cover that is perfectly sound and does not satisfy the contract, which is the same as no cover as far as the principal is concerned.

The most common defects we see are a testing period too short for the plant being commissioned, the principal not named where the contract requires joint names, and a maintenance period that ends before the defects liability period in the contract does. All three are cheap to correct at placement and impossible to correct after a loss.

Erection all risk and contractors all risk are often spoken about as the same thing. They are not: the first is for installing plant and machinery, the second for civil construction. A project with substantial civil work and substantial plant needs the right one leading, and we settle that before approaching the market rather than after.

FAQ

Common Questions

Erection all risk covers the installation, testing and commissioning of plant and machinery. Contractors all risk covers civil construction work. Where a project has both, the policy is placed on whichever predominates, with the other included, and getting that the right way round changes what is covered.
Usually from the arrival of materials on site, or from the start date stated in the policy, and it runs to the end of the erection period plus the testing period, followed by the maintenance period if one is taken. Those dates should be set from the contract programme, not estimated.
Whatever the contract says. Many principals require joint names, or require to be named as an insured party, and some require a waiver of subrogation against them. This is stated in the tender and is not something to decide independently of it.
The defective part itself is normally excluded. Damage caused by the defect to the rest of the works is often covered, depending on which of the standard defects exclusions the policy carries. Which one applies is worth checking, because they differ materially.
Not as standard. Advance loss of profit, sometimes called delay in start-up, is a separate cover for the revenue lost when commissioning is pushed back by an insured loss. On a project financed against a commissioning date, it is often the more important of the two.
The full contract value and a copy of the contract or work order, the start date and the erection period plus any maintenance period required, the site address and a description of the work, and whether the principal requires the cover in their name or jointly.