What is Erection All Risk Insurance ?
The Erection All Risk insurance is designed to cover engineering projects involving erection, installation, testing and commissioning of electrical or mechanical equipment. This policy provides coverage for the duration of erection work including testing/commissioning (except for used machines)
Mostly, small or large contractors companies need to take this policy every time a project is carried out, so that their risk of exposure can be minimized.
What are the covers / benefits provided in erection all risk insurance?
Section I – Material Damage
- It has separate cover for :
- Erection Work – includes permanent and temporary work
- Construction Plant & Equipment – consisting of worker’s accommodation, storage shed, preparation & mixing plant, scaffolding, utilities (electricity, water supply)
- Construction Machinery – all plant and machinery which renders its service only when moving and under control of an operator. This would include earth moving equipment, cranes and the like, as well as site vehicles not licensed for use on public roads, whether such machinery is owned or hired by the contractor.
- Principal’s Existing/ Surrounding Properties – property located on the site as well as property surrounding the site belonging to or held in care, custody or control of persons named in the policy as the insureds
- Removal Of Debris – incurred for the removal of debris from the site in the event of loss indemnifiable under the policy
- Professional Fees – the expenses incurred in engaging consultants for consultation work following a loss
indemnifiable under the policy
Section II – Third Party Liability
- This Section is in respect of third party liability for which we shall become legally liable to pay as damages consequent upon:
(i) accidental bodily injury to or illness of third party
(ii) accidental loss or damage to property belonging to third party
Duration of cover corresponds with the contract period which is stipulated in the Letter of Award.
What are the major exclusions under this erection all risk insurance Malaysia policy?
- War, Civil War and any act of terrorism
- Radioactive and nuclear energy risks
- Willful acts or willful negligence
- Wear and tear
- Cessation of work whether total or partial.
- Faulty design
- the cost of replacement, repair or rectification of defective material and/or workmanship
- consequential loss of any kind or description whatsoever including penalties, losses due to delay, lack of performance, loss of contract
- loss or damage discovered only at the time of taking an inventory
- Seepage, Pollution and Contamination
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