Engineering Insurance

During periods of growth and development, construction, whether on land or sea leads to associated risks that would require insurance, generally classified as engineering cover.

There are many different types of risk and cover available, but the below provide a wide range of risk cover that are normally used by contractors.

Contractor All Risk (CAR) Insurance

Erection All Risks (EAR) Insurance

An Erection All Risks (EAR) policy provides coverage for the erection of mechanical and electrical plants. Interest of Suppliers/Manufacturers, Contractors and Subcontractors can be recorded in the policy.

A Contractors All Risk Policy covers the risk of accidental physical loss or damage in respect of the contract works, during the execution of a civil project. CAR insurance provides an ‘all risk cover‘. All perils are covered unless specifically excluded.

over commences from the commencement of work or after unloading of the first consignment at project site, whichever is earlier and terminates on handing over of works to the principal or expiry of policy, whichever is earlier.

The policy covers risks associated with storage, assembly/erection and testing of Plant and Machinery. EAR insurance provides comprehensive cover. All perils are covered unless specifically excluded. Cover commences from the time of unloading of the first consignment at the project site and terminates on completion of testing or handing over of the project to the Principal, or the period chosen, whichever is earlier.

Extensions to this cover can be made to include Escalation, Clearance and Removal of Debris, Third Party Liability, Maintenance, Damage to Owner’s Surrounding Property, Express Freight for replacement parts, Additional Customs Duty and Holiday and Overtime rates and Wages. These extensions require additional premiums to cover the risk, and are easily arranged through any RAK Insurance office.

Machinery Breakdown Insurance

The Insurance Policy broadly covers loss due to all kinds of accidental, electrical and mechanical breakdowns due to internal and external causes. Cover is provided during the time the machinery is in operation or at rest or in the process of dismantling, overhauls or during subsequent re-erection at the same premises.

The Insurance Policy does not cover loss and/or damage from Fire and allied perils, Theft, overloading experiments, wilful acts or gross negligence, gradually developing flaws and deterioration from normal use. Loss of profit caused by the breakdown is covered separately.

Extensions can be granted depending on client’s needs.

Contractors Plant & Machinery (CPM) Insurance

Contactors Plant & Machinery policy covers construction equipment such as cranes, excavators etc.

CPM Insurance covers loss or damage to the contractor’s property due to any cause that is accidental and external in nature.

Cover operates when the insured property is at work or at rest or being dismantled for the purpose of cleaning/overhauling or during subsequent re-erection.

Extensions to the cover can be arranged subject to premium adjustment.

Loss of Profit Following Machinery Breakdown Insurance

Modern machinery loss of profits insurance (MLOP) is a means of meeting the increasing need on the part of industry for comprehensive tailor made insurance protection from the consequences of business interruption.

MLOP insurance provides cover for the actual loss of profits sustained as a result of a business interruption caused by material damage indemnifiable under machinery insurance.

RAK Insurance MLOP Insurance provides a flexible plan that covers a wide range of industries against the risk of machinery breakdown causing an increase in cost of production or complete loss of production through the breakdown.

In contrast to a material loss, the loss of profits following a business interruption depends on the time factor involved. The longer the period for which the operation is interrupted or impaired, the greater the loss of profits. For this reason specifying an indemnity period limit which represents the maximum time for which an insurer is liable for loss of profits is essential and generally the indemnity period limit is three, six, nine or twelve months. The basic rule is that the indemnity period limit should relate to the amount of time required for removing the interruption loss, i.e. for repairing the machinery damaged or for the delivery of new machinery in cases of a total loss, assembly and trial run. Higher premiums are, of course, charged for long indemnity period limits.

As with all RAK Insurance products, qualified professionals are available to provide guidance to Customers in this complicated area of commercial insurance.


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