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Project Insurance

Project insurance is mainly concerned with construction and erection activities for various project works like bridges, tunnels, residential buildings, hydropower projects, airports, dams, hospitals, roads, metro projects, etc. 

Various project insurance policies cover potential work disruptions due to contingencies at the worksite, minimizing material damage, losses, and third-party liabilities. Given the complexity and duration of construction projects, insurers offer tailored products to meet client insurance needs throughout the project lifecycle. 

Types Of Insurance

1. Contractor’s All Risk (CAR)

Contractor All Risk insurance (also known as CAR cover) is a kind of project insurance cover. It is specifically designed to cover projects involving major civil works such as buildings, roads, tunnels, bridges, airports, reservoirs, tanks, sewage treatment plants, etc.

  • Loss or damage due to willful act or willful negligence.
  • Cessation of work, whether total or partially. 
  • Cost of rectification of defective material and / or workmanship.
  • Loss or damage due to willful act or willful negligence.
  • Damage due to faulty design. 
  • Inventory losses.
  • Deductible as applicable, etc. 
  • Owner’s Surrounding Property.  
  • Design Defect. 
  • Contract work taken over or put into service, etc.  
  • Extended Maintenance Cover. 
  • Continuity of Cover. 

2. Erection All Risk (EAR)

Erection All Risk insurance (also known as EAR cover) is a kind of project insurance cover that provides protection on an all-risks basis including cover for the testing and commissioning of the erected machines – providing that they are not considered prototypes. Equipment All Risk (EAR) insurance covers unforeseen and accidental physical loss or damage and protects against third-party claims arising from erection activity.

  • Loss or damage due to willful act or willful negligence.
  • Cessation of work, whether total or partially. 
  • Loss or damage due to normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use, rust. These are losses that are bound to happen and hence not insured. 
  • Consequential loss/ liability of any kind. 
  • Damage due to faulty design. 
  • Deductible as applicable, etc. 
  • Off-site storage and fabrication.
  • Design Defect Covers: DE 4 (defective part exclusion)
  • Loss Minimization Expenses. 
  • Ex Expediting Cost including Air Freight & Express Freight. 

3. Delay in Start-up Policy (DSU) / ALOP

ALOP (Advanced Loss of Profits) Insurance is a business income protection cover linked to construction or erection projects. It aims to compensate principals for lost gross profit due to delays in project completion. A prerequisite for ALOP coverage is an underlying CAR or EAR policy. It doesn’t cover normal working delays. Period of insurance ends with material damage cover termination. 

  • Loss of gross profit and/or increased cost of working due to any delay caused by or resulting from damage to operating media or feedstock, shortage, destruction, deterioration of, or damage to any materials necessary for the insured business; 
  • Any loss due to fines or damages for breach of contract, for late or non-completion of orders, or for any penalties of whatever nature;  
  • Loss of business due to causes such as suspension, lapse, or cancellation of a lease, license or order, etc. which occurs after the date of actual commencement of the business;  
  • Loss of or damage to construction work of a prototype nature, unless specifically agreed by endorsement. 

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TYPES OF PROJECT INSURANCE

Indemnity Health Insurance Plans

It offers health coverage to a single person only. This type of health insurance covers the cost of surgery, hospitalization, room rent, day care procedures and many more. The premium amount of an individual health plan is determined based on the insured age and medical history.

It offers health coverage to people who are above 65 years of age. Generally, the premium amount of a senior citizen health plan is slightly higher than that of an individual and family health insurance plan. A senior citizen health insurance covers the cost of medicines, doctor’s consultation, pre and post-hospitalization etc.

Benefit Health Insurance Plans

It offers health coverage to a single person only. This type of health insurance covers the cost of surgery, hospitalization, room rent, day care procedures and many more. The premium amount of an individual health plan is determined based on the insured age and medical history.

It offers health coverage to people who are above 65 years of age. Generally, the premium amount of a senior citizen health plan is slightly higher than that of an individual and family health insurance plan. A senior citizen health insurance covers the cost of medicines, doctor’s consultation, pre and post-hospitalization etc.

USP

  • Timely quote submission with comparison of various insurance companies with hard negotiations
  • Thorough audit of each policy, with review of Add-on coverage provided, if any necessary endorsements
  • Hassle free claim intimation with timely settlements.

Frequently Asked Questions

The policy can be taken by the Principal, Contractor, Or Sub-Contractor, Jointly or Separately. 

The policy can be taken by any individual or organization as Principal or Contractor of a project. It can be taken in joint names also. 

The testing period shall commence for each item of the property insured with the application of the first test load or the first introduction of fuel, feedstock, or process materials and shall last for the duration specified in the schedule or until the item has passed its tests, whichever is the earlier.  

Under ALOP Policy only the Principal or owner can be the insured. As in project policies Contractors, Subcontractors, Engineers, Consultants, etc. are part of the project policy and cannot be accepted as Insured in ALOP cover. 

No. ALOP / DSU covers are to be purchased in conjunction with: 

  • Marine Cargo Insurance for critical items of the project. 
  • Erection All Risks Insurance / Construction All Risk Insurance. 

Gross profit means the amount by which the value of the turnover and the value of the closing stock exceed the value of the opening stock and the amount of the specified working expenses. The value of the opening and closing stocks shall be calculated in accordance with the insured’s normal accounting methods, due to provision being made for depreciation.

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