Erection All Risks (EAR) Insurance
EAR covers the erection, installation, testing and commissioning of plant, machinery and steel structures. It is closely related to CAR but carries higher testing and mechanical/electrical commissioning risk, which IC-88 tests through scope and exclusion questions.
Core rules
- EAR insures erection/installation work, materials and often the completed plant during testing and commissioning, subject to policy terms.
- The sum insured should include erection cost, materials, freight, erection labour and related overheads; testing/commissioning costs may need specific treatment.
- Third-party liability and maintenance cover are extensions, not automatic.
- Common exclusions: faulty design/material/workmanship, wear and tear, corrosion, normal testing losses, war/nuclear risks, penalties and consequential loss.
- Underwriting examines the erection method, heavy lifting, hot testing, commissioning programme, site access, flood/earthquake exposure and contractor experience.
Worked example
A turbine is erected under an EAR policy. During overspeed testing, a bearing fails because the contractor assembled it incorrectly, damaging the turbine casing. The cost of correcting the faulty assembly is excluded; damage to the casing may be covered if it is resultant damage to other insured property and not otherwise excluded. The deductible applies to the covered damage.
Traps
Do not treat EAR as identical to CAR: testing and commissioning risk is central. Do not assume third-party liability is included. Do not pay for the defective part itself. Do not ignore the difference between normal testing loss and accidental damage during testing.