Construction All Risks (CAR) vs Erection All Risks (EAR)

Construction All Risks (CAR) and Erection All Risks (EAR) policies provide essential protection for inherently hazardous construction work. Although CAR and EAR insurance policies are often considered interchangeable, significant distinctions exist. In this article, we will discuss the particulars of the CAR and EAR insurance coverages and then explain their notable differences.

Construction All Risks (CAR)

Construction All Risks (CAR) insurance is a specialized commercial policy designed to protect civil engineering projects, building construction, and physical site assets from unexpected physical loss or damage.

Throughout the building lifecycle, active sites face constant dangers ranging from severe typhoons and flooding to structural collapses and accidental site damage. CAR insurance absorbs these crushing financial shocks by covering the repair and replacement costs of damaged civil works, temporary structures, and building materials, while also providing essential protection against third-party bodily injury and property damage liabilities arising from construction activities.

At Red Asia Insurance, our CAR policy provides insurance protection for:

• Delay in start-up

• Third-party liability

• Maintenance coverage

• Professional fees

• Expediting expenses

  
  

The key features of our CAR policy include:

• Coverage for all costs and expenses incurred with our consent for defending claims against your company

• Coverage for material damage to works and legal liability towards third parties

• Coverage for your legal liability for bodily injury to any other person or damage to property caused by an accident

Erection All Risks (EAR)

Erection All Risks (EAR) insurance is a specialised policy tailored for projects focused on the assembly, installation, and testing of mechanical or electrical plant, machinery, and steel structures. Unlike standard civil construction, mechanical and engineering setups carry intense technical risks during assembly, transit storage, and initial commissioning phases. EAR insurance covers physical damage to the contract works and equipment, machinery breakdown during testing phases, and third-party liabilities arising directly from industrial erection and installation operations.

Some insurers combine EAR and CAR coverages into a single policy. Machinery installation and refurbishment are two essential aspects of a construction project – EAR covers both. Like CAR, an EAR policy protects contractors, principals, and developers from liability.

At Red Asia Insurance, our EAR policy provides insurance protection for:

• Erection and installation of plant machinery during the construction period

• Machinery from the commencement of loading for dispatch to the site (including transit and incidental storage)

• Defective design and machinery breakdown during testing and commissioning

• Free issue materials that are included in the declared values.

  
  

The key features of our EAR policy include:

• Comprehensive insurance coverage for the erection of projects and provides cover during storage, erection, and testing of property at the insured site

• Coverage for the entire period of the project

• Other coverage, including various add-ons as per the customers’ needs

  
  

Additionally, your EAR policy can be extended to include advanced loss of profits, owned contractors’ plant and hired-in plant.

Construction All Risks (CAR) vs. Erection All Risks (EAR) Comparison

Feature / Criteria	Construction All Risks (CAR) Insurance	Erection All Risks (EAR) Insurance
Primary Application	Civil engineering and building construction (e.g., buildings, roads, bridges, and commercial structures).	Installation and assembly of mechanical/electrical plant, machinery, and steel structures.
Main Core Focus	Protecting concrete, brickwork, civil structures, and temporary site facilities against physical loss or damage.	Protecting high-value industrial machinery, turbines, factory equipment, and technical components during assembly.
Testing & Commissioning	Generally minimal focus, as civil works are structural rather than mechanical or operational.	Highly critical coverage component, insuring machinery breakdown and failures during testing and trial runs.
Typical Project Examples	Commercial high-rises, residential housing developments, highways, tunnels, and marine docks.	Power plants, oil and gas facilities, water treatment plants, manufacturing assembly lines, and heavy industrial machinery.
Primary Exposure Risks	Weather-related site damage (typhoons, floods), structural collapses, fire, and construction site accidents.	Transit damage, mechanical assembly errors, equipment breakdowns during testing, and installation mishaps.

CAR and EAR Insurance FAQs

Can Construction All Risks and Erection All Risks coverages be combined into a single policy?

Yes, some insurers provide combined CAR/EAR policies for large hybrid projects involving both civil construction and mechanical installation. However, separate underwriting sections still apply.

Does CAR insurance cover the machinery breakdown of installed equipment during testing?

No,  CAR policies cover only civil building works. Projects that include installation and testing of complex machinery require a dedicated EAR policy or specific extensions.

Are subcontractors working on the project site protected under these policies?

CAR and EAR policies are usually joint-name policies that cover the principal, main contractors, and designated subcontractors involved in the insured project.

Contact Red Asia Insurance today to learn more about our Construction All Risks and Erection All Risks insurance policies.