Erection All Risks Insurance- Benefits and Exclusions

Published: 05th October 2009
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"The Erection All Risks policy is a comprehensive insurance, which provides complete protection against all types of risks associated with erection, testing, commissioning of machinery, plant and equipment during constructional stage.

Erection All Risks Insurance embraces a wide variety of plant and machinery at all levels of complexity, ranging from the relatively straight forward positioning and connecting up of single manufactured items of equipment such as small pumps or electric motors to complete major industrial complex such as a large power station or manufacturing facility.

Scope: Insurance is on an 'all-risks' basis and in particular includes-
- Fire, lightning, explosion, aircraft damage
- Riot, strike, malicious acts
- Flood, inundation, storm, cyclone and allied perils
- Landslide, subsidence and rockslide
- Burglary and theft
- Faults in erection
- Human errors, negligence
- Short circuiting, arcing, excess voltage
- Electrical and mechanical breakdown
- Collapse, damage due to foreign objects, impact damages
- Any other sudden, unforeseen, accidental damages not explicitly excluded

Sum Insured: The Sum Insured for the insurance should not be less than the Completely erected value of the property inclusive of freight, customs duty and erection cost. Basically, insurance should be for the contract price.

Extensions: Cover can be extended to include up to a limit chosen by you on the following on payment of additional premium-
- Third party liability
- Cross liability
- Earthquake
- Cost of removal of debris
- Express freight, overtime charges
- Air freight
- Additional customs duty
- Escalation
- Owner's surrounding property
- Storage risk at Fabricator's Premises
- Maintenance cover-Visits, Extended maintenance
- Dismantling

Exclusions: Some of the exclusions under this insurance policy are-
- War Invasion
- Nuclear Reaction Nuclear Radiation or Radioactive Contamination
- Insured's Contribution - Deductible
- Willful Act or Willful Negligence of the Insured
- Cessation of Work
- Defective Material or Bad workmanship
- Wear Tear Corrosion Oxidation Deterioration
- Breakage of Glass
- Disappearance or Shortage (Inventory Losses)
- Design Defects
- Loss of files, drawings, cash, cheques etc,.
- Consequential Loss
- Terrorism

Excess (Deductible): It is standard to apply excess to claims as neither the client nor the insurer wishes to be troubled with handling small losses.

To comply with a client's wishes (e.g. contract conditions, financial policy or risk management programme), higher excess may be applied, with a suitable reduction in premium.


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