Erection All Risks Insurance

Erection All Risks (EAR) Insurance is a specialised engineering insurance product designed to protect project owners, contractors, and sub-contractors against unforeseen physical loss or damage occurring during the erection and installation of machinery, plant, and steel structures. In India, EAR policies are typically required by lenders and project financiers for capital-intensive infrastructure and industrial projects, and their wordings follow the Munich Re model adapted for Indian conditions by the General Insurance Council. The policy operates on an all-risks basis, meaning it covers all perils unless specifically excluded. Common covered perils include fire, explosion, natural catastrophes, theft, human error, defective workmanship, and testing accidents. The standard EAR policy comprises three sections: Section I covers the contract works and materials, Section II covers construction plant and equipment, and Section III covers third-party liability. An important feature is the testing and commissioning cover, which responds to damage during cold and hot testing of installed machinery. The maintenance period extension provides cover for defects discovered after handover that originated during the erection phase. EAR insurance is particularly relevant in India's expanding power, cement, steel, petrochemical, and renewable energy sectors where large-scale plant erection is commonplace. Project financing institutions such as IDBI, ICICI, and PFC routinely mandate EAR cover as a condition of loan disbursement. The policy dovetails with Contractors' All Risks Insurance when both civil and erection works are undertaken simultaneously.