Definition:Erection all risks insurance (EAR)
🏗️ Erection all risks insurance (EAR) is a specialized engineering insurance product designed to cover physical loss or damage to plant, machinery, and steel structures during their installation, erection, and testing phases. Unlike contractors all risks (CAR) policies, which focus primarily on civil construction works, EAR policies are tailored to projects dominated by mechanical and electrical erection — power plants, refineries, manufacturing facilities, and large-scale infrastructure where heavy equipment assembly is the central activity. The coverage typically extends to the works themselves, construction equipment, surrounding property, and third-party liability arising from the erection process.
🔧 An EAR policy operates on an all-risks basis, meaning it covers every peril unless specifically excluded. Common exclusions include wear and tear, design defects discovered before installation, and war or nuclear risks. The policy period usually spans from arrival of equipment at the project site through mechanical completion, with an optional maintenance or defects liability period that extends cover for a defined window after handover. Underwriters assess risk based on factors such as the project's value, complexity, site conditions, the contractor's track record, and the availability of loss-prevention measures. Reinsurers often participate in large EAR programs given the significant sums insured involved in major industrial erection projects.
💡 For project owners, contractors, and lenders alike, EAR coverage is often a contractual prerequisite before any erection work begins. Banks financing capital-intensive industrial projects routinely require evidence of adequate EAR insurance as a condition of loan disbursement, linking the policy directly to project finance structures. From an insurer's perspective, EAR represents a niche but technically demanding line that rewards deep risk-engineering expertise — carriers that invest in specialized loss-control surveys and maintain experienced engineering claims adjusters tend to achieve better loss ratios and stronger client retention in this segment.
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