Insurance Journal (4th Quarter 2017)

Guest Contribution
CAR / EAR Policy:
Contractors/Erection all risk
insurance covers all risk associated
with the projects and it plays a vital
role till the project becomes
operational. Below is a small
description of how CAR policy will
work till the end of the project.
Some of the key benefits of this policy
are as follows:
Ÿ It covers all sort of accidental
damages associated with construction
projects subject to exclusion
Ÿ Most economic option
Ÿ Insurance premiums are calculated
accurately by insurer than hazard
margin by contractors
Ÿ Offer efficient financial protection
to all parties concerned
Ÿ Professional advise by insurer's
experts
In project insurance there are more
than two parties involved in the
contract, hence the responsibility and
liability may differ. Below is table of
the most common parties involved in
t h e c o n t r a c t r e f l e c t i n g t h e i r
responsibilities and coverage
available under CAR/EAR insurance
or any other if there is a GAP.
Coverage under Project Insurance:
Ÿ
Ÿ
FLEXA
AOG perils
Ÿ E l e c t r i c a l / M e c h a n i c a l
breakdown / Impact / Collision
Ÿ Human Error
Most Common exclusions include:
Ÿ Liquidated damages and penalties
Ÿ Willful act of negligence
Ÿ War & Political Risks
Ÿ Nuclear Phenomena
Ÿ Faulty Design / Material &
Workmanship
Ÿ Inventory Loss
Ÿ Contractual Liabilities
Project Insurance Underwriting:
T h e U n d e r w r i t i n g a n d R i s k
assessment of project insurance
depends if a project is within possible
insurable hazards or if it requires any
special conditions that take care of
unforeseen exposures that may give
rise to a loss. Some of the most
common criteria considered are:
Ÿ Geography / Topography / Climate
of Project location
Ÿ Infrastructure availability /
Transport & Repair Facilities
Ÿ Political / Administrative Situation
Ÿ Size of Project / Complexity /
Value of works
Ÿ Time period for execution of the
project
Ÿ Competence of the contractor
Ÿ Number of Qualified Supervisors
staff & local labor
Ÿ Parties Insured
Ÿ Potential AOG Exposures
Ÿ A u x i l i a r y S t r u c t u r e s a n d
protective measures
Ÿ TPL exposures
The UW process also includes
considering Engineering Hazards
such as:
Ÿ
Ÿ
Ÿ
Subsoil condition
Underground water control
Testing and measurements
Standard Classification for Rating of
Engineering Projects are:
Light / Medium Risks:
Ÿ
Apartment blocks
Ÿ P r i v a t e O f f i c e
blocks
Ÿ C o m m u n i t y
Buildings ( Hospitals /
Schools / Offices )
Ÿ Water towers
Ÿ Roads
Ÿ Sewage systems
Heavy Risks:
Ÿ Sky-scrappers
Ÿ Tunneling Projects
Ÿ Bridges with large
Spans
Ÿ Hydro Projects
Insurance Journal October, November, December 2017
25
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