Definition:Erection all risks (EAR)
🏗️ Erection all risks (EAR) is a specialized engineering insurance policy designed to cover the installation, assembly, and erection of machinery, plant, equipment, and steel or prefabricated structures at a project site. It belongs to the broader family of construction insurance products but is distinguished from contractors' all risks (CAR) insurance by its focus on mechanical and electrical erection activities rather than civil works. EAR coverage is standard for projects such as power plant installations, industrial processing facilities, telecommunications towers, wind turbines, and large-scale manufacturing equipment assembly — essentially any project where the primary risk involves the erection and testing of machinery rather than ground-up building construction.
🔧 An EAR policy typically provides all-risks coverage for physical loss or damage to the contract works, construction plant, and equipment during the erection period, including testing and commissioning phases. Most policies also include a maintenance or defects liability period — commonly twelve months — following handover, during which the insurer covers damage arising from defects originating during the erection phase. The coverage is structured in sections: Section I covers the works themselves (materials, equipment, and labor costs for reinstatement), while Section II provides third-party liability protection for bodily injury or property damage claims arising from the erection activities. Delay in start-up (DSU) coverage, sometimes called advance loss of profits, can be added as a Section III extension to protect the project owner against financial losses caused by delayed commissioning due to an insured physical damage event. Policies are typically placed through specialist brokers in markets such as Lloyd's and the large European engineering insurers, with Munich Re and Swiss Re among the major reinsurers active in this space.
📌 For project owners, contractors, and lenders, EAR coverage is often a contractual prerequisite before erection work can commence, since the concentration of high-value equipment at a single site creates significant exposure to losses from fire, collapse, weather events, faulty workmanship, or testing accidents. Engineering underwriters assess risks based on the nature of the machinery, the erection methodology, the experience of the contractor, site conditions, and the project timeline. In markets across the Middle East and Southeast Asia, where large-scale infrastructure and energy projects are commonplace, EAR placements represent a substantial segment of the engineering insurance market. The Munich Re and Swiss Re engineering reinsurance wordings have historically set benchmarks for EAR policy conditions internationally, though local regulatory requirements — such as compulsory third-party liability minimums — vary by jurisdiction and must be layered into the program design.
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