Category: Construction specialty · Reviewed by Mark Fox, Broker · Renewals · Last reviewed 2026-06-05
Erection All Risks, commonly abbreviated EAR, is the project-specific insurance covering the installation and erection of plant, machinery and equipment, used principally for power station construction, factory fit-out, process plant installation and large-scale machinery installation projects.
Category: Construction specialty Also known as: EAR insurance, erection all risks insurance, plant erection cover First codified: Lloyd’s wordings from c.1960s; ABI Erection All Risks form Related legislation: Construction (Design and Management) Regulations 2015 [1]; Supply of Machinery (Safety) Regulations 2008 [2]; Health and Safety at Work etc. Act 1974 [3]
Erection All Risks (EAR) insurance covers the installation, assembly and commissioning of plant, machinery and equipment from delivery to site through to handover or final acceptance. It is the standard market product for projects involving the erection of significant plant rather than the construction of buildings or civil works. Typical applications include power stations (conventional and renewable), refineries and petrochemical complexes, manufacturing facilities, paper mills, water treatment plants, and major industrial process plants [4][5].
The principal sections of a typical EAR policy mirror those of Contractors All Risks but adapted to the erection context:
Section 1 — Physical damage to the works: ‘all risks’ cover for accidental physical loss of or damage to the plant and equipment being installed, plus civil works ancillary to the installation, plus construction materials and consumables on site.
Section 2 — Public liability: third-party legal liability for personal injury and property damage arising from the erection operations.
Section 3 — Existing structures: cover for the employer’s existing structures and adjacent property where the new plant is being installed within or adjacent to existing operations.
Section 4 — Plant and equipment: cover for the contractor’s plant and tools.
Section 5 — Testing and commissioning: extended cover for the commissioning phase, including ‘hot testing’ where applicable, with specific exclusions for certain testing-period perils.
Section 6 — Delay in start-up / advance loss of profits: separately purchased extension responding to the employer’s loss of expected revenue caused by a physical-damage event delaying commissioning.
The hot testing extension is a particular feature of EAR wordings. Many process plants and power stations cannot be fully commissioned without operating at design temperature and pressure, and the period of hot testing involves elevated risk of mechanical breakdown, fire and explosion that requires specific underwriting attention [4][5].
EAR insurance operates within the same legal and regulatory framework as Contractors All Risks. The Construction (Design and Management) Regulations 2015 apply to erection works; the Health and Safety at Work etc. Act 1974 and supporting regulations apply to the safety of operations on site; and the Construction Act 1996 governs the contractual relationships [1][3][6].
The Supply of Machinery (Safety) Regulations 2008 implement the EU Machinery Directive 2006/42/EC and impose duties on manufacturers and suppliers of machinery to ensure that products meet essential safety and health requirements. EAR underwriters expect compliance with the Regulations as a baseline for the equipment being installed [2].
For process plant projects falling within the COMAH regime (Control of Major Accident Hazards Regulations 2015), the COMAH safety case requirements apply to the design and operation of the completed facility. The construction-phase EAR cover is one element of the wider risk management framework, with the operational COMAH cover commencing on completion [6][7].
For power station and large industrial projects, the regulatory framework includes the Electricity Act 1989 (for generation licensing), environmental permitting under the Environmental Permitting (England and Wales) Regulations 2016, and (for nuclear projects) the Nuclear Installations Act 1965 and the nuclear safety regulatory regime under ONR [8].
For projects involving the installation of plant in marine environments (offshore wind turbines, marine pipelines, harbour installations), the Marine Insurance Act 1906 may apply to marine elements of the cover, with the principles of insurable interest, fair presentation, warranties and average applying with the modifications introduced by the Insurance Act 2015 [9].
An EAR policy is typically arranged at the start of an erection project by the principal contractor or, for very large projects, by the employer under an Owner Controlled Insurance Programme. The policy covers the erection period from delivery of equipment to site through commissioning and into a defined maintenance or defects liability period. Premium is typically paid in instalments tied to project milestones, with adjustment at completion based on final project value [4][5].
The cover is normally a ‘composite’ or ‘joint names’ policy covering the contractor, the employer, the equipment vendor (where the vendor retains residual responsibility through commissioning), the design consultants and (often) the financiers. Each insured party has the rights of a named insured. Marine cargo insurance is typically arranged separately to cover transit to site, with the EAR cover attaching on arrival [4][5].
Underwriters assess EAR risk based on the project value, the type of plant being installed (with novel technologies and high-temperature high-pressure process plant attracting higher premium), the contractor’s experience with similar plant, the site conditions, the testing and commissioning programme, the design risk (with proven designs commanding more favourable terms than first-of-a-kind installations), and the claims experience for similar projects. Premium rates are typically expressed as a rate per £100 of contract value, with rates ranging from £0.10 per £100 for routine industrial fit-out to £1.00 per £100 or more for first-of-a-kind power plant or process technology [4][5].
Claims handling involves specialist erection and engineering loss adjusters working alongside the contractor’s project team, the vendor and the employer’s representatives. Common claims include mechanical damage during lifting and positioning, electrical damage during testing, fire damage during hot work or commissioning, damage to ancillary plant from process upsets during commissioning, and (less commonly but with higher severity) explosion and pressure system failure during commissioning. Major commissioning losses on greenfield process plants can result in claims of hundreds of millions of pounds and substantial delays to first production [4][5].
Conventional EAR: the standard product for industrial plant erection projects, with the wording sections described above.
Combined CAR/EAR: integrated cover for projects involving both significant civil construction and significant plant installation. Used for power stations (where both civil works and turbine installation are major project elements) and process plants. The cover sections are merged to avoid demarcation disputes between the civil construction phase and the plant erection phase.
Vendor-supplied EAR: for projects where the equipment vendor retains responsibility for installation and commissioning, the vendor may arrange EAR cover under its commercial terms with the customer. The interplay with the customer’s project insurance requires careful contractual structuring.
Testing and commissioning extension: where commissioning is particularly extended or particularly risk-laden, a specific extension to the EAR cover provides modified perils and limits during the commissioning phase.
Maintenance and defects liability extension: cover for the maintenance period or defects liability period following commissioning, addressing the residual risk of defective installation or commissioning becoming apparent during operations.
Project Cargo and Marine extension: where the project equipment is sourced internationally, marine cargo insurance is typically arranged in parallel to cover transit, with the EAR attaching on arrival at site. Combined wordings (‘one-stop’ project policies) are available for projects where unified coverage from factory through commissioning is preferred.
A UK utility company is constructing a 1,500 MW combined cycle gas turbine power station with a contract value of approximately £900m and a construction period of 36 months. The project comprises civil works (turbine hall, cooling towers, switchyard) and the installation of two large gas turbines, one steam turbine, generators, heat recovery steam generators and balance of plant. EAR insurance is arranged as a combined CAR/EAR for the full contract value plus £40m for existing site infrastructure, £35m for public liability and an 18-month delay in start-up cover of £450m calculated at the expected first-year capacity payment revenue. The combined CAR/EAR programme is placed in the London, Bermuda and continental European markets with annual premium of approximately £4.2m. Figures in this example are illustrative.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
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