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Construction insurance of engineering is generally one time policy, for the period of the project. It has several forms of insurance as defined above.

1. Contractor’s All Risks (CAR) Policy:

This is issued to protect the interests of contractors and principals for civil engineering projects like constructor of building bridges etc. It is All Risk cover unless the risks are specifically excluded.

The insured perils are – fire, lightning, explosion, flood, inundation, windstorm, theft, burglary, landslide, earthquake, accidental damage, collapse, act of terrorisms. Third party liability is also covered by paying extra premium.

The subject matter of insurance are civil engineering projects like building, warehouse, hospitals, schools, churches, theaters, cinemas, factories, bridges, dams, canals, tunnels, water supply systems, road, railways air port and so on.

Claims:

The losses as describes above are made good by repair or replacement the cost of clearance and removal of debris will also be reimbursed if insured for. Cost of alterations, additions and improvements shall not be recoverable.

The payment of loss or damage caused by its own mechanical or electrical breakdown or derangement is not paid here in this policy as there is a separate policy for mechanical and electrical breakdown.

The claim would be the cost of repairs necessary to restore the property to their conditions immediately before the occurrence of the damage less salvage or in case of total loss, the actual value of property before the occurrence of loss less salvage.

The cover of third party liability is at the option of the insured. The indemnity applies to legal liability of the insured to pay compensation for accidental loss of or damage to property of other persons and or fatal or non-fatal injury to any person.

2. Erection All Risks (EAR) Policy:

Erection All Risks policy is concerned with erection of electrical plant and machinery and equipment and structures. It is also known as Storage Cum Erection (SCE) policy.

The insurable plants are boilers, transformers, switch gear, compressors and plant for manufacturing purposes etc. The policy covers structural steel work; tanks oil refinery, plant, blast furnaces etc.

The individual machine, turbine, generator etc., are also covered under this policy. Civil engineering works necessary for the project may be covered in his policy. If the actual erection period is shorter than the period indicate in the schedule, no refund of premium shall be allowed.

Underwriting:

Special attentions are paid for transit insurance machinery and equipment is duly inspected by the insurer, no unusually prolonged storage period is involved. The risk is not exposed to extra ordinary hazards of storm, flood, inundations, subsidence and cyclone.

The project will be completed within the time schedule. Most of the reinsurers follow their own rating pattern, which varies from the nature of project, location, size, period of insurance Tariff Advisory Committee have standardised the rates and excess for this class of business.

Claims:

The loss producing events are the same as discussed in Contractors All Risk (CAR) policy.

The Marine-Cum Erection (MCE), Contract Works (CW) insurance, Advanced Loss of Profits (ALOP) insurance or Delay in startup (DSU) insurance have all the terms and conditions as described above.

The Erection All Risks insurance policy covers plant and machinery under erection. The cover normally commences from the arrival at site of erection of the materials and it operates during storage of the material, erection and test run of the plant and terminate on the commissioning of the plant.

Civil engineering work, provided they are incidental to erection of plant of machinery, are also cover. Third party liability arising out of the insured’s activities with the erection work is also covered. The erection policy is issued for the entire period of erection including trial run.

Excess:

It is customary for excess to be applied under machinery breakdown and erection policies. Boiler explosion is, however not subject to excess.

The purpose of excess is twofold, first, to eliminate small claims thereby reducing clerical work for the insurance and second, to make the insured more conscious of this responsibility to take adequate precautions and to observe all safety regulations and statutory rules.