Erection All Risks (EAR) Insurance Explained: Coverage & Costs

A comprehensive guide to protecting your construction projects with EAR insurance

What Is Erection All Risks (EAR) Insurance?

Erection All Risks (EAR) insurance is a specialist form of cover designed specifically for construction and engineering projects. It protects against physical loss or damage to plant, materials, and structures during the erection, installation, and construction phases of a project. Unlike standard commercial insurance, EAR provides comprehensive protection from the moment materials arrive on site through to practical completion.

EAR insurance is essential for contractors, construction companies, and project managers who need to protect significant investments in equipment, materials, and work-in-progress. Whether you're building a commercial property, installing industrial machinery, or undertaking a major renovation, EAR insurance ensures financial protection against unforeseen events.

Who Needs EAR Insurance?

Several types of businesses and professionals benefit from EAR insurance coverage:

• General Contractors: Companies undertaking construction projects of any size

• Specialist Installers: Businesses installing plant, machinery, or equipment

• Project Managers: Those overseeing construction or installation work

• Main Contractors: Large-scale construction firms managing multiple subcontractors

• Subcontractors: Specialist trades requiring protection during their portion of work

• Plant Hire Companies: Organisations hiring out equipment to construction sites

• Engineering Firms: Companies involved in infrastructure or industrial projects

If your business involves any form of construction, erection, or installation work, EAR insurance should be a key component of your risk management strategy.

What Does EAR Insurance Cover?

EAR insurance provides broad protection across multiple areas of construction risk. Understanding the scope of coverage helps you identify whether this insurance meets your project needs.

Physical Damage to Materials and Plant

EAR covers accidental physical loss or damage to materials, equipment, and plant on site. This includes damage from weather events, theft, vandalism, and accidental breakage. Whether materials are stored on site or in transit, EAR provides protection during the construction phase.

Work-in-Progress

One of the key benefits of EAR insurance is coverage for work that's in progress. If a partially completed structure or installation is damaged before completion, EAR covers the cost of repair or replacement, protecting your investment in labour and materials.

Temporary Structures

Temporary structures erected during construction—such as scaffolding, formwork, and temporary buildings—are covered under EAR policies. This protection extends to damage caused by weather, accidents, or other insured perils.

Testing and Commissioning

Many EAR policies extend coverage through the testing and commissioning phase, protecting equipment during initial operation before handover to the client.

Professional Fees

Some policies include coverage for professional fees incurred in reinstating or repairing damaged work, such as architect or engineer costs.

Debris Removal

EAR typically covers the cost of removing debris following a loss, reducing the financial burden of site clearance after an incident.

Key Exclusions and Limitations

While EAR insurance offers comprehensive protection, certain exclusions apply. Understanding these limitations ensures you're not caught off-guard by gaps in coverage.

Wear and Tear

Normal wear and tear, gradual deterioration, and maintenance issues are not covered. EAR protects against sudden, accidental damage, not gradual degradation.

Design Defects

Damage resulting from faulty design or poor workmanship is typically excluded. The policy covers accidental damage, not losses arising from professional errors or design flaws.

Weather-Related Exclusions

Some policies exclude damage from specific weather events like flooding or subsidence, depending on the policy wording. Always clarify weather coverage with your insurer.

Unattended Sites

Damage occurring at unattended sites or during periods when work has ceased may be excluded or subject to additional conditions.

Theft and Vandalism Limits

While theft and vandalism are typically covered, policies often impose sublimits or require specific security measures to be in place.

Mechanical Breakdown

Damage resulting from mechanical or electrical breakdown of equipment is generally excluded unless specifically included in the policy.

How EAR Insurance Costs Are Calculated

EAR insurance premiums vary significantly based on multiple factors. Understanding what influences your costs helps you budget effectively and identify ways to reduce premiums.

Project Value and Duration

The total value of materials, plant, and work on site directly impacts premium costs. Longer project durations typically result in higher premiums due to extended exposure to risk.

Type of Construction Work

Different construction types carry different risk profiles. High-risk projects like demolition or work at height command higher premiums than straightforward building work.

Location and Site Conditions

Projects in high-crime areas or locations prone to adverse weather may attract higher premiums. Site security measures and environmental factors influence risk assessment.

Claims History

Your company's previous claims record significantly affects premium pricing. A clean claims history typically results in more competitive rates.

Security Measures

Implementation of robust security protocols—such as CCTV, site fencing, and access controls—can reduce premiums by demonstrating proactive risk management.

Excess and Deductibles

Choosing a higher excess reduces your premium but increases your financial exposure in the event of a claim. Balancing these factors is crucial for cost-effective coverage.

Contractor Experience

Insurers assess the experience and competence of the contractor managing the project. Established firms with strong track records often receive better rates.

Typical EAR Insurance Costs

While costs vary widely, typical EAR insurance premiums range from 0.5% to 2% of the total project value, depending on the factors outlined above. For a £1 million construction project, you might expect premiums between £5,000 and £20,000. Smaller projects may have minimum premiums, while large infrastructure projects may negotiate bespoke rates.

Obtaining quotes from multiple insurers ensures you receive competitive pricing tailored to your specific project requirements.

Coverage Period and Extensions

Standard EAR policies cover the construction and erection phase through to practical completion. However, extensions are available for specific circumstances:

• Defects Liability Period: Extended coverage during the defects liability period (typically 12 months post-completion)

• Testing and Commissioning: Coverage extended to include testing phases before handover

• Maintenance Period: Protection during initial maintenance and operation phases

• Off-Site Storage: Coverage for materials stored off-site before delivery to the project

Claims Process and Settlement

Understanding the claims process ensures swift resolution if damage occurs. Most insurers follow a standardized procedure:

1. Notify your insurer immediately upon discovering damage

2. Document the damage with photographs and detailed descriptions

3. Preserve evidence and prevent further damage where possible

4. Provide detailed claim documentation including invoices and repair quotes

5. Cooperate with the insurer's loss adjuster or surveyor

6. Receive settlement based on the policy terms and agreed valuation

Prompt notification and thorough documentation expedite the claims process and maximize your chances of full settlement.

Choosing the Right EAR Insurance Provider

Selecting an appropriate insurer requires careful consideration of several factors:

Specialist Expertise

Choose insurers with demonstrated expertise in construction and engineering insurance. Specialists understand industry-specific risks and offer tailored solutions.

Claims Support

Evaluate the insurer's claims handling reputation and support services. Quick, fair claims settlement is essential when project timelines are tight.

Flexible Coverage Options

Look for insurers offering flexible policy wording and extensions to accommodate your specific project requirements.

Competitive Pricing

Obtain quotes from multiple providers to ensure competitive rates without compromising on coverage quality.

Financial Stability

Verify the insurer's financial strength and ratings to ensure they can meet claims obligations when needed.

Risk Management and Premium Reduction

Implementing effective risk management practices not only protects your projects but also reduces insurance premiums:

• Maintain comprehensive site security with fencing, lighting, and access controls

• Implement regular site inspections and maintenance protocols

• Provide staff training on safety and loss prevention procedures

• Maintain detailed records of all materials and equipment on site

• Establish clear communication channels with your insurer

• Document all site conditions and weather events

• Conduct regular risk assessments throughout the project lifecycle

Frequently Asked Questions

Does EAR insurance cover theft?

Yes, theft is typically covered under EAR policies, though sublimits may apply and security measures may be required.

Is EAR insurance compulsory?

While not legally compulsory, most construction contracts require EAR insurance as a condition of engagement. Clients and financiers typically mandate this coverage.

Can EAR insurance be cancelled mid-project?

EAR policies are typically non-cancellable by the insurer during the project period, providing security for contractors and project managers.

What happens if work extends beyond the policy period?

Policy periods can be extended through endorsements. Discuss timeline extensions with your insurer before the original period expires.

Does EAR cover professional indemnity?

No. EAR covers physical damage to materials and plant. Professional indemnity insurance is a separate policy covering liability for professional errors.

Conclusion

Erection All Risks (EAR) insurance is an essential protection mechanism for construction and engineering projects of all sizes. By providing comprehensive coverage for materials, plant, and work-in-progress, EAR insurance protects your financial investment and ensures project continuity in the face of unforeseen events.

Understanding what EAR covers, recognizing key exclusions, and implementing effective risk management practices enables you to secure appropriate coverage at competitive rates. Whether you're a general contractor, specialist installer, or project manager, EAR insurance should form a cornerstone of your risk management strategy.

When selecting EAR insurance, prioritize specialist providers with strong claims support and flexible coverage options. Obtain multiple quotes, clarify policy wording, and ensure coverage aligns with your project requirements. With proper EAR insurance in place, you can focus on delivering successful projects with confidence and financial security.