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Inclusions and Exclusions of Erection All Risk Insurance

Posted on 29 August, 2022

An Erection All Risk policy is a type of construction insurance that provides coverage for any loss or damage during the erection of a new building or structure. Construction companies and developers typically use this type of policy to protect themselves from financial losses that could occur during the construction process.

The Erection All Risk policy is different from a builder’s risk policy, which only provides coverage for damage that occurs to the actual structure during construction. The Erection All Risk policy will also provide coverage for any other losses during the erection process, such as loss of materials or equipment, injuries to workers, or even delays in the construction schedule.

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What are the Inclusions and Exclusions under Erection All Risk Insurance?

An Erection All Risk policy protects businesses during the construction of a new building. The policy covers any risks associated with the erection process, including accidents and damage to property. However, the insurers do keep some exclusions to maintain the standard of the policy.

Let’s look at the inclusions and exclusions in the Erection All Risk Policy.

1. Inclusions

  • Risks at the location of the construction like theft, burglary, lightning, and fire

  • Risks during testing such as safety devices failing, electricity leakage, short-circuiting, and explosion

  • Acts of God, including storms, hurricanes, flooding, subsidence, rockslide, landslide, earthquake

  • Collision, the impact caused by falling objects, cranes malfunctioning, etc.

  • Negligence, Erection flaws, strike & riot, terrorism, etc.

  • Damage to the insured property during erection

  • Professional expenses incurred during the rectification of any faults in the Insured Property

  • Loss or damage to scaffolding, formwork and falsework

  • Risks in temporary works

  • Risks around lifting operations

  • Load testing risks

  • Risks in the construction of foundations

  • Loss of or damage during the erection of plant and machinery

  • Loss of or damage to materials, parts and equipment in transit to or storage in the insured property

  • Loss of or damage to materials, parts and equipment during installation

  • Loss of rental income arising from delay in the completing the Insured Property caused by an insured event

  • Damage to temporary buildings erected at the site of the Insured Property

  • Professional fees and expenses incurred for the redesigning of the Insured Property as a result of any loss or damage covered by the policy

2. Exclusions

  • Normal wear and tear, deterioration, obsolescence, lack of use, rust, etc.

  • Any penalties for not delivering the construction work within the predetermined time

  • War and other perils caused due to war

  • Nuclear and associated perils

  • Stopping of work

  • Intentional negligence

  • Damages that existed before the erection

  • Losses that did not financially affect the project

  • Financial loss arising from faulty design and defective material

Who Needs an Erection All Risk Policy?

Erection All Risk Insurance includes materials, labour, and other expenses incurred during the erection process. The policy may also cover damages caused to the building or property nearby during the erection process.

Erection All Risk insurance is typically purchased by the property owner on which the structure will be erected. The insurance company then becomes the party responsible for any damages that occur during erection, up to the policy’s limit. It can give the owners peace of mind while protecting them financially in case of an accident.

An Erection All Risk policy can help small business owners, property owners or renters, Large Business owners, and Medium Business owners.

Erection All Risk Insurance is Usually Taken for Which Projects in India?

  • Manufacturing

  • Power Plants

  • Water

  • Fabrication

  • Wastewater treatment

  • Signal tower for telecommunication centre

Case Study : An Example of Erection All Risk Insurance at Work
budding fabricator, Abhinav Chandekar, hired a team of engineers to develop a new fabrication unit in Pune. Abhinav purchased an Erection All Risk Insurance policy to act as a safety net should something go wrong during the construction of the new unit.

The work began as expected. However, after some days, heavy rainfall destroyed the foundation of the building. There was no option but to restart the job. So, Abhinav informed the insurer about the event immediately.

The insurer investigators discovered no willful negligence and that the engineers had taken every precaution to avoid any disaster. However, the rain was unexpectedly heavy and caused substantial financial damage to the project.

The insurance company ultimately paid Abhinav for the damages. If he had not opted for an Erection All Risk Policy at the right time, Abhinav would not have been able to continue his business.

To Conclude

As Erection All Risk Insurance is a relatively new type of policy, some confusion still exists surrounding what is included and excluded under the coverage. However, as more and more insurers offer this type of policy, the terms and conditions are becoming more standardised.

Please carefully review the terms and conditions of any Erection All Risk policy before buying it to ensure that it meets your specific needs. For a comprehensive cover, outstanding customer service, and fast claim processing, check out ICICI Lombard Erection All Risk Insurance Policy. ICICI Lombard is one of the leading Insurance Companies in India.

  • Erection All Risk Insurance
  • Product Code: 5006
  • Product UIN: IRDAN115RP0023V01200708

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This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Workman Compensation, 4010 , IRDAN115P0010V01200607)