Insurance of Construction and Engineering Risks

Construction and engineering work insurance is a comprehensive type of insurance that protects against the risks of loss or damage to an object under construction, construction equipment and machinery, other objects at a construction site, as well as third party liability for damage to third parties as a result of accidents during the construction process. 

According to the international classification:

• CAR (Contractors' All Risks Insurance) – insurance of construction works against all risks.
• EAR (Engineering All Risks Insurance) – insurance of engineering (erection) works against all risks.

Contractors' All Risks Insurance

Contractors' All Risks Insurance (CAR) provides effective protection against potential losses, covering risks that may arise during the construction, reconstruction or major repairs of buildings and structures.

What can be insured?

Under this type, any construction objects can be insured. 

During the construction of objects, the following are subject to insurance:

1. Object of construction. All works performed by the construction company or its contractors, including pre-construction activities at the construction site, as well as auxiliary facilities, all materials stored at the construction site and necessary for the construction work.
2. Construction site equipment
3. Construction machinery – both own and leased.
4. Debris removal expenses after an insured event occurs. Expenses incurred in connection with the removal of debris during the liquidation of indemnifiable damage.
5. Insured's third-party liability. Claims from third parties resulting from property damage or bodily injury in connection with construction work for which the insured person is legally liable, with the exclusion of claims made by employees and workers of a construction company in connection with an accident at work.
6. Objects on or near which works are carried out. 

Determination of the Sum Insured 

The sum insured is the agreed (contractual, project) construction cost, the cost of materials used and works performed.

Insurance Coverage

Contractors' All Risk Insurance (CAR) provides extensive insurance coverage under the “All Risk” principle, which covers damage resulting from any event other than those indicated as exclusions.

In international practice, such exclusions are:

• actions resulting from hostilities, strikes, civil commotions and terrorism;
• impact of nuclear energy;
• denial of access to the construction object;
• business interruption and contingent business interruption;
• delay in construction start-up;
• insurance of completed engineering facilities, etc.

Terms of Insurance

This type of insurance covers risks in the period from the start of construction work to the moment the object is commissioned. The liability of the insurance company is terminated for those objects that are taken into operation. 

Insurance coverage can be extended further for the period of warranty (maintenance) service.

Engineering All Risks Insurance (EAR) 

Engineering all risks insurance provides coverage against all risks that arise during the installation of machines, mechanisms, as well as during works that are associated with the erection of any structures.

Insureds under this type of insurance can be all parties bearing risks in connection with the installation of objects:

• manufacturer or supplier of the installation object;
• firms entrusted with the installation;
• installation object owner;
• the lender.

Objects of Insurance:

According to the engineering risks insurance policy, the following may be insured:

• Installation and test run of all types of machines, mechanisms and structures.
• Installation equipment.
• Items located on the installation site and accepted for storage by the Insured.
• Debris removal expenses after an insured event occurrence.
• Additional costs for paying overtime and express freight, if such costs are directly related to the liquidation of indemnifiable damage.
• Insured person’s third party liability.
• Construction works that are carried out at such facilities can also be insured if the proportion of installation works prevails, i.e. when the cost of installed equipment exceeds the cost of construction work.

Insurance Coverage

Engineering all risks insurance offers extensive insurance coverage. All losses incurred during the period of insurance against sudden and unexpected incidents are compensated if the cause of occurrence is not included in the list of exclusions:

• claims related to penalties or deficiencies in the services provided;
• hostilities;
• seizure of property under the decision of authorities;
• impact of nuclear energy.

Due to the fact that this type of insurance coverage is related to highly technological risks, we can provide you with tailored insurance conditions, as well as insurance rates, after filling out the questionnaires.