An Overview of Various Categories of Construction Insurance

Types of Construction Insurance

From unpredictable accidents to uncontrollable natural calamities, constructions come with risks. It is important to have coverage that keeps you and your engineering project  sheltered from those risks. There are different types of construction insurance covers which is why it is important to evaluate which will suit your needs best.

    1. Contractor’s All Risk Insurance Policy: This option gives ultimate coverage against several issues. As the name suggests, the policy covers everything from calamities like an earthquake to unfortunate accidents like the collapsing of the property. This would also cover any damages to property that could also be caused by a third party or worker negligence like poor craftsmanship, burglary, or any kind of sabotage. Considered a non-standard policy, the Contractor’s All Risk Insurance Policy cover also provides compensation of losses and damages that are caused by fire. Any damages that happen during renovation or due to faulty construction will also be covered in this case.


    1. Erection All Risks (EAR)/Storage-Cum-Erection Insurance Policy:  With Contract Square, you can benefit from the EAR Policy. The coverage of this insurance policy extends from the unloading of materials at any construction site to the erection and testing of all equipment. Any accidental damage to the plant and machinery that is being used throughout the project will also be taken care of. You will also be protected against any risks that you undertake during the storage of all items or machinery. This policy can be applied to a variety of engineering projects and can be undertaken by the Principal or the Main Contractor of the entire project.


    1. Machinery Breakdown Insurance Policy: Loss or damage to machinery and equipment due to ocassional breakdowns is a common problem faced by a lot of engineers. This policy ensures that all your heavy machinery – be it electrical or mechanical, is protected. It also includes any parts of equipment that you would be used for cleaning or overhauling (within specified areas). The quote of the policy would depend upon a variety of parameters including the value of your machinery. Any breakdowns caused due to short circuits, collisions, initiation of fire, etc will be a part of this policy’s coverage. The idea is to ensure compensation is given for partial or total loss caused in the form of breakdowns and the insurer receives the value of the machine if required.


    1. Machinery Loss of Profit Insurance Policy: Due to unforeseen circumstances, you might incur a loss that has been caused by any accidental damage to machinery or equipment such as boilers, pressure plants, etc. This might lead to the ceasing of production or even to an increased cost of working. The Machinery Loss of Profit policy insures the owner against any such risks that can lead to a drop in profits of the business.


  1. Workers’ Compensation Policy: It is essential to keep your staff and workers safe and protected. And in turn, keep your operations running smoothly in case of any injuries or casualties. This policy ensures that all legal and statutory liabilities are taken care of in any such unfortunate incidents such as tripping, burning, slipping, falling, etc. While it may not always be possible to protect workers from accidental injuries, they can (at the very minimum) be compensated to cover their excessive medical bills and loss of earnings.
  1. Delay in site handover.
  2. Delay in issue of engineering drawings.
  3. Delay in supply of resources- material, equipment, and services.
  4. Delay in decision making.
  5. Delay in acquiring permits & approvals.
  6. Delay in payment of bills & advances.
  7. Delay due to a change in the scope of the project.
  8. Delay due to a change in plans /design of the project.
  9. Delay due to subcontractor/ vendor/another agency.

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