EAR (Erection All Risks) insurance is an engineering insurance that covers sudden and unforeseen physical damage to machinery and plant from the moment they are unloaded at the erection site until erection, testing and handover are completed. In projects such as factories, power plants and substations, it takes over where cargo insurance ends.
Scope: equipment on site
Article 1 of the General Conditions for Erection Insurance (Montaj Sigortaları Genel Şartları) applied in Türkiye defines the cover as follows: loss of and damage to the insured items, while they are at the erection site during the period of cover, arising from an unforeseen and sudden cause not excluded in the policy. In practice, this covers risks such as dropping during crane lifting, fire caused by an erection error, flood, storm, theft and damage occurring during commissioning tests. Damage caused to third parties and debris removal costs, however, are excluded unless otherwise agreed; they are written into the policy as additional covers.
The difference between EAR and CAR
| Feature | EAR (Erection) | CAR (Construction) |
|---|---|---|
| Main subject | Erection of machinery, installations, steel structures | Buildings, roads, bridges, construction works |
| Main share of value | Equipment cost | Construction labour and materials |
| Testing period | Part of the cover | Usually limited or none |
| Typical project | Power plant, substation, production line | Housing, infrastructure, industrial buildings |
In mixed projects, which policy to use is decided by looking at whether the main weight of the work lies in construction or in erection.
Where is the line drawn with cargo insurance?
The link between the two policies is established by Article 4 of the General Conditions: cover begins from the moment the listed items are unloaded at the erection site. If there is cargo insurance for the same machinery and materials, EAR cover begins from the end of the cargo cover. The end points of the two policies must therefore be read together.
- Transport leg: Project cargo insurance or a cargo policy from the factory to the site.
- Moment of unloading: The moment the equipment is set down on site; the report, photographs and any shock recorder data are documented at this point.
- Site storage and erection: EAR policy.
- Testing and commissioning: Unless otherwise stated, a four-week testing period is included in EAR cover; no testing cover is granted for used machinery.
- Handover: Cover ends for the parts handed over to the employer.
The risk of a gap arises precisely at this transition. If the cargo policy ends at the port and EAR begins on unloading at the site, the road leg between the port and the site remains uncovered. It must also be stated clearly which policy covers equipment waiting in temporary storage on site. For concealed damage that occurred during transport but is noticed on site, the allocation between the two insurers is left to the policy conditions.
DSU and ALOP: the cost of delay
The General Conditions exclude consequential losses such as loss of profit and contractual penalties arising from delays in erection. Because damage to a key piece of equipment can push back the commissioning date by months, this risk is covered separately on large projects. For transport-related delay, DSU (delay in start-up) cover is used, and for erection-related delay, ALOP cover added to the EAR policy.
Common mistakes
- Taking out the cargo and EAR policies from different insurers without matching their end and start points.
- Assuming that equipment used for erection, such as cranes and scaffolding, is also covered; unless otherwise agreed, it is excluded.
- Not having a testing period longer than four weeks written into the policy.
- Not recording the condition of the packaging and visible damage in the site handover report.
For the unloading and placement plan on site, see the entry on placement on site; for the coordination of covers, see the project cargo insurance page.