Erection All Risks (EAR) Insurance Policy – must for all Industrialists

A must for every industrialist an Erection All Risks Insurance Policy is one that helps you stay secure from all possible risks when you plan to set up a Plant & Machinery. It is essentially coverage for the setup of any mechanical and electrical plant and is beneficial for all as the same includes a lot of risk. All monetary risks included in it related to the suppliers, manufacturers, contractors, sub-contractors and all other people involved can be included in the policy.

The scope of such a policy is pretty broad and covers the risks right from the commencement of erection to the time till it is erected and running. It also includes the storage of parts and the testing of the plant. Almost all related dangers are covered unless obviously stated in the insurance policy contract. The insurance coverage starts from the point where the consignment of the plant and machinery is unloaded and ends only when the plant and machinery is tested and handed over to the principal in running condition as agreed. It can get over before this time only if agreed in the contract and the stipulated time is over.

The sum insured in such a case is usually equal to the erected value of the plant. This however included other incidental expense like the cost of freight, custom duty, costs of erection and other expenses that can be incurred during erection. Proper documentation is needed to support the cost and expenses claims and have to be provided at the time of the policy as well as in case of a claim made.

The premium in this case is also as per the requirement of the client. The premium amount is dependent on factors like the cost of the plant and machinery, the kind of cover needed, the experience of the contractors and the duration of the project. While the longer the period bigger the premium amount, experienced contractors can reduce the amount of premium as in that case the insurer runs lesser risk of damage.

In case the plant and machinery meets with some accident and damage has occurred the claims can cover expenses up to clearance and removal of debris too. This is however additional and should be taken up as an add-on on the policy. Here the third party liability can also be covered and the insurance coverage would include the claims of any third party that get injured or suffers a loss in some accident. This can also include other incidental expenses like extra wages etc.