Project Policies- Contractors’ All Risks (CAR) Insurance Policy & Erection All Risks Insurance Policy (EAR)
All physical assets are exposed to various risks during their creation/construction viz. during the project stage. For instance, a factory can catch fire or get flooded, or suffer loss in an earthquake not only during its operation but also during construction/erection. Similarly, a road may get inundated or suffer loss in a landslide during construction/erection
Any unfortunate loss or damage during construction/erection can cause abandonment of the project itself unless protected against risks.
- Contractors All Risk(CAR) and Erection All Risk (EAR) policies: These are All Risk policies covering any accidental physical loss or damage to property subject to a few named exclusions.
- CAR policy covers Civil Projects like Building, Commercial Complexes, Dams, Bridges, Roads, Irrigation projects, etc.
- EAR policy covers Engineering Projects like the erection of Plants, Factories, Transmission and Distribution lines, etc.
- The policies are given for the entire project period, i.e., from day 1 till the 1st commercial operations day
- The coverages under both the policies are similar
- Perils covered are
- Location risks like Fire, Burglary, lightning, etc.
- Handling risks like Collison, impact, dropping, snapping of crane ropes, etc.
- A human element like negligence, bad workmanship, malicious damage, sabotage, and the like
- Act of God perils like floods, cyclones, inundation, earthquake, etc.
- These policies also cover Public Liability risk arising from project activities to a limited extent
- Who needs these policies: All entrepreneurs, builders, realtors, contractors, sub-contractors, Government Deptt & Agencies in the capacity of Principals & the like and Banks, Financial institutions, etc.
- Add on covers: The policy coverage can be widened by seeking some add on covers like debris removal, off-site storage, coverage for insured’s surrounding property, contractors’ plant and machinery, additional customs duty, defect liabilities (Maintenance and extended maintenance), etc.
- What should be Sum Insured: The total completed value of the project should be the sum inured in these policies viz. the contract value of the project plus non-contract values for Insured’s office, stores, spares, staff quarters, testing laboratories, etc.
- Claim settlement: The claims if any under these policies will be settled by way of reimbursement of expenses incurred in restoring the damaged/lost items. The claim will be settled only if and after the reinstatement of the property takes place.
