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Engineering Insurance


Contractor’s All Risk Policy


Contractor’s Plant & Machinery


Erection All Risk Insurance

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What is Engineering Insurance?

Presently India is on a cusp of growth, which had led to many developmental & infrastructure projects being undertaken across the country. The infrastructure projects involve various stages & each stage is vulnerable to various kind of risks, in the event of accident and breakdowns, they can be potential sources of financial loss and could adversely impact business.

It is an insurance policy that enables financial protection for assets & revenues against various engineering-related risks. An Engineering Insurance policy serves as a shield against several risk associated with levelling work, excavation, structure erection, and operating any equipment, machinery, or plant.

The engineering industry is intimately involved with constructing and designing buildings and structures. Thus, it is prone to severe accidents and perils. Plainly put, an Engineering Insurance policy caters to different forms of uncertainties associated with on-site construction, including plant and machinery usage. In spite of proper precautions and maintenance of machinery, mishap or accidents may yet occur, which might impact the entire project with huge financial loss.

Engineering Insurance

Types of Engineering Insurance coverage in India


Contractor’s All Risk Policy

This insurance policy covers the contractors by offering financial protection against losses incurred during the construction phase of projects. The Contractor’s All Risk Insurance covers equipment and
plants specifically used on-site from uncertainties arising during construction. This feature makes it
necessary for big-budget projects such as airports, flyovers, etc.
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Recommended for: Although contractors all risk policy may be taken by the principal or by the contractor, but usually, under the terms of the agreement between the contractor and the principal, it is obligatory on the part of the contractor to avail a CAR insurance in their joint names before the commencement of the project.


Contractor’s Plant & Machinery Insurance

This insurance policy covers losses caused by damage to machinery and plants. Building contractors rely heavily on various costly machinery during construction, including cranes, road-rollers, bulldozers,
hydraulic excavators, and more. Any damage to these machines can result in significant financial losses.
However, with a Contractor’s Plant & Machinery Insurance, these losses can be reduced considerably.
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Recommended for: This policy can be taken by the owner, lessor or hirer (where responsible either legally or through a leasing agreement) of the machinery/equipment.


Erection All Risk Insurance

This insurance provides a financial cushion in case of damages or losses suffered during machinery installation in factories or offices. This policy is designed to meet the demands of the fast-changing
market that is technology-driven. The policy covers the installation of machinery in projects of all sizes, from
big oil refineries to small offices. The coverage is for the entire duration of the project.
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Recommended for: Property owners or renters, small business owners, medium business owners, large business owners.

Other Types of Engineering Insurance Policies

Insurance Companies offer the following types of Engineering Insurance Plans:


Machinery Breakdown Policy

It offers financial protection against sudden or unexpected damages of various equipment caused when in use. Usually, both external and internal damages are covered in the Machinery Breakdown Policy. Often, internal damages can occur due to electrical issues, overheating, lubrication, etc. This insurance policy can prove to be a lifesave for factory owners to safeguard their assets.


Boiler Pressure Plant Insurance Policy

This policy compensates the policyholder when any boiler or other pressurized machinery undergoes unforeseen and physical loss or damage. It covers explosion or collapse of the insured items, any damage to the boilers & pressure vessels (except Fire), and even damage to surrounding property up to a certain limit.


Electronic Equipment Policy

This policy secures low-voltage devices and systems such as UPS, computers, and stabilizers. It can also cover medical equipment such as X-ray machines, ultrasound machines, etc. Under the Electronic Equipment Policy, the Insurer pays for repairs and replacement to reinstate the devices and equipment to their former condition.

What is covered in Engineering Insurance

Below are the detailed inclusions and exclusions of Engineering Insurance:

  • Malicious acts and riots
  • Fire, lightning, explosion
  • Floods, catastrophic storms, and other associated perils
  • Earth’s movements, including landslides, rockslides, and subsidence
  • Defects in construction
  • Burglary or theft
  • Human errors or negligence
  • Voltage fluctuations, short-circuits
  • Mechanical breakdown
  • Impacts, foreign objects, collapses
  • Any unforeseen accidents

  • War or invasion
  • Deductibles - Contributed by the insured
  • Radioactive contamination due to Nuclear Reactions
  • Willful misconduct, such as planned negligence
  • Poor workmanship and subpar quality of material
  • Discontinuation of work
  • Deterioration caused by oxidation and wear and tear
  • Damage of glass
  • Shortage caused by the disappearance or other factors
  • Defective design
  • Loss of drawings, files, or financial instruments like cash, cheques, etc.
  • Terrorism
  • Any involved party’s failure to meet their contractual obligation

Types of Engineering Insurance Policies

Add-ons in Engineering Insurance

The insured party has the option to extend their cover to any of the add-ons mentioned below for a small additional premium. However, the add-ons cannot exceed the policyholder’s limit for the base plan.

  • Cross liability
  • Third-party liability
  • Earthquake
  • Traders
  • Express freight, charges of overtime
  • Debris removal cost
  • Airfreight
  • Escalation
  • Additional custom duty
  • Surrounding property of the owner
  • Dismantling
  • Storage risk at the premises of fabricators
  • Extended maintenance and Maintenance cover-visit