Project Insurance
Erection All Risk (EAR) Insurance
EAR Insurance is designed to cover unforeseen damages or losses that may occur during the installation, erection, and commissioning of machinery, plants, and steel structures. It safeguards businesses against material damage, third-party liabilities, and natural disasters during project execution.
Key Benefits of EAR Insurance:
- Covers Installation & Testing Risks – Protects against damage occurring during unloading, assembly, and trial runs.
- Financial Security – Shields businesses from unexpected losses due to fire, explosions, and machinery breakdowns.
- Third-Party Liability Protection – Covers legal claims from external parties affected by project activities.
- Ensures Contractual Compliance – Required by lenders and project stakeholders for financial stability.
However, EAR Insurance does not cover risks that emerge due to flaws in design or engineering miscalculations. This is where Design Defect Insurance (DDI) becomes essential.
Design Defect Insurance (DDI): Protection Against Hidden Design Failures
Even after a successful installation, structural failures and operational breakdowns can occur due to flaws in design, faulty engineering, or material defects. DDI provides financial coverage against such risks, ensuring the long-term reliability of the project.
Key Benefits of DDI:
- Covers Latent Design Defects – Protects against failures caused by undetected engineering or architectural errors.
- Long-Term Protection – Offers security even after project completion.
- Reduces Financial Liabilities – Prevents costly legal claims and operational failures.
- Enhances Project Credibility – Ensures that contractors and developers deliver structurally sound projects.
How DDI Complements EAR Insurance
| Risk Factor | Erection All Risk (EAR) Insurance | Design Defect Insurance (DDI) |
|---|---|---|
|
Coverage Period |
During installation, erection, and testing. |
After project completion, for structural integrity. |
|
What It Covers? |
Accidental damage, fire, explosions, machinery breakdown, and third-party liability. |
Design flaws, engineering miscalculations, and hidden structural weaknesses. |
|
Claim Trigger |
A sudden and unforeseen event during project execution. |
A defect that leads to failure after project completion. |
|
Who Needs It? |
Contractors, manufacturers, and project owners installing machinery and structures. |
Developers, engineers, and project owners concerned about long-term reliability. |
Together, EAR and DDI form a powerful combination—EAR provides short-term protection during project execution, while DDI ensures long-term security against design failures.
What is Covered & What is Not Covered?
What is Covered?
- EAR Insurance – Material damage, third-party liabilities, fire, natural disasters, and machinery breakdown.
- DDI Insurance – Structural failures, engineering miscalculations, and operational breakdowns due to design defects.
What is Not Covered? (Exclusions)
- EAR Excludes Design Defects – EAR does not cover damages due to inherent design flaws.
- DDI Excludes Poor Workmanship – DDI does not cover failures caused by improper construction or execution.
Frequently Asked Questions (FAQs)
Why do I need both EAR and DDI Insurance?
EAR protects against installation-related damages, while DDI covers long-term risks caused by design flaws. Together, they offer complete protection.
Does EAR Insurance cover defective design?
No, EAR does not cover design defects. That’s why DDI is essential.
When should I purchase DDI Insurance?
DDI is required after project completion to cover hidden design flaws that may surface over time.
Can I get a combined policy for EAR and DDI?
Some insurers offer bundled solutions, but they remain separate coverages addressing different risk periods.
Who needs these insurances?
EAR is essential for contractors and manufacturers involved in machinery installation.
DDI is vital for developers, engineers, and project owners managing large-scale infrastructure projects.
