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 project stage. For instance, a factory can catch fire or get flooded or suffer loss in earth quake not only during its operation but also during construction/erection. Similarly, a road may get inundated or suffer loss in landslide during construction/erection
Any unfortunate loss or damage during construction/erection can cause abandonment of 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 erection of Plants, Factories, Transmission and Distribution lines etc,
- The policies are given for entire project period, i.e., from the day 1 till the 1st commercial operations day
- The coverages under both the policies are similar
- Perils covered are
a) Location risks like Fire, Burglary, lightning etc.
b) Handling risks like Collison, impact, dropping, snapping of crane ropes etc.
c) Human element like negligence, bad workmanship, malicious damage, sabotage and the like
d) Act of God perils like, flood, cyclones, inundation, earth quake 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 Institution 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.