Definition:Erection all risks (EAR) insurance
🏗️ Erection all risks (EAR) insurance is a specialized engineering insurance product designed to cover the installation, erection, and testing of machinery, plant, and steel structures against physical loss or damage arising from virtually any cause not specifically excluded. Unlike standard property insurance, EAR policies are tailored for projects where the primary activity involves assembling, mounting, or commissioning equipment — such as power plants, refineries, telecommunications towers, industrial production lines, and large-scale mechanical installations. The coverage originated in the continental European engineering insurance tradition and is now written worldwide, with significant markets in Europe, the Middle East, and Asia.
🔧 An EAR policy typically attaches at the start of transit of equipment to the project site and remains in force through storage, erection, testing, and commissioning, often extending into a defects liability period (also called a maintenance period) after handover. The core Section I covers material damage to the works, including equipment and materials, on an all-risks basis subject to named exclusions such as war, nuclear contamination, and wear and tear. Section II provides third-party liability coverage for bodily injury or property damage arising from the erection activities. Policies are commonly placed through specialty brokers in London, Singapore, and Dubai, and may involve reinsurance or coinsurance arrangements when project values are substantial. Insurers assess risk based on the type of equipment, project location, contractor experience, erection methodology, and testing protocols.
💡 For contractors, project owners, and lenders, EAR insurance is an essential risk transfer mechanism that protects against the concentrated financial exposure inherent in complex installation projects. A single incident during commissioning — such as a turbine failure or a structural collapse during lifting — can cause losses running into tens or hundreds of millions of dollars, along with significant project delays covered under optional delay in start-up extensions. Financial institutions providing project finance routinely require EAR cover as a condition of lending. The product is closely related to contractors' all risks (CAR) insurance, which covers civil construction works; on many large infrastructure projects, both CAR and EAR policies are placed together or combined into a single comprehensive project insurance program.
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