Understanding the difference between Construction All Risks and Erection All Risks Insurance

14 June 2021

Construction All Risks (CAR) and Erection All Risks (EAR) policies provide important protection for inherently hazardous construction work. Although CAR and EAR insurance policies are often considered to be interchangeable, there are significant differences between them. Through this article, we will discuss the particulars of the CAR and EAR insurance coverages, and their notable differences.

Construction All Risks (CAR)

Construction work is complex and risky, and naturally exposes management to so many risks that can unexpectedly force expensive project delays and costly liabilities, potentially cutting down on profits. Construction All Risk (CAR) Insurance helps to prevent a disruption to your business and a delay in a project moving forward. CAR offers the ever-important flexibility for lengthy construction projects. CAR insurance provides coverage for contract materials and works, as well as contractors’ plant and equipment, project delays, non-negligent liabilities and public liabilities.

CAR policy provides insurance protection for:

  • Delay in start-up
  • Third party liability
  • Maintenance coverage
  • Professional fees
  • Expediting expenses
Erection All Risks (EAR)

Erection All Risks (EAR) insurance provides coverage for the erection and installation of electrical or mechanical plant and machinery. The erection and installation stage provides a large amount of exposure and risk that often may lead to potential loss or damage. This liability falls on the contractor or employer. EAR insurance provides coverages for such situations. EAR policies are designed to cover the risk of loss arising out of the erection and installation of machinery, plant, and steel structures, including physical damage to the contract works, equipment, and machinery, and liability for third-party bodily injury or property damage arising out these operations. Coverage for delay in start-up can be added as optional coverage.

EAR policy provides insurance protection for:

  • Erection and installation of plant machinery during the construction period
  • Machinery from the commencement of loading for dispatch to site (including transit and incidental storage)
  • Defective design and machinery breakdown during testing and commissioning
  • Free issue materials where they are included in the declared values.
Differences between CAR & EAR

Traditionally, CAR coverage provides protection for construction or contractor all risks and is used mainly for the movement of dirt and concrete building work. CAR is more suitable for civil works such as buildings, roads, bridges, and docks.

Meanwhile, EAR coverage is applied to the use of installing machinery and equipment. EAR is more suitable for engineering facilities and other construction projects involving erections and installations. For example, EAR insurance policies provide coverage for the construction of power plants, gas processing facilities and others.

Contact Unison today to learn more about EAR and CAR policies. At Unison, we have a team of experts with a wealth of experience in creating EAR and CAR policies. Our team will understand your needs, assess the risks of your business and draw out a policy catering to your requirements.