What is Engineering Insurance?
Engineering insurance provides financial protection against risks associated with construction projects, installation activities, and the operation of machinery and equipment. This type of insurance is designed to safeguard against accidents and uncertainties that commonly occur during on-site construction and the use of plant and machinery.
As the industry involves designing, building, and creating, the likelihood of accidents and related hazards increases, making engineering insurance essential for mitigating such risks.
Why is Engineering Insurance Important?
Civil engineering is the backbone of innovation and development, driving a nation’s progress. However, large-scale construction projects are often accompanied by significant risks, including:
- Loss or damage to equipment and raw materials.
- Delays in project timelines.
- Damage to structures during or after construction.
Engineering insurance ensures comprehensive protection for projects, materials, and machinery, enabling smooth project execution while minimizing financial losses from unforeseen events.
Erection All Risk (EAR) Insurance
EAR insurance offers comprehensive coverage for all parties involved in erection and installation work, protecting against risks during operations.
Contractors’ All Risk (CAR) Insurance
CAR insurance covers a contractor’s construction work, providing protection for ongoing projects, including construction sites, materials, and associated risks.
Contractors’ Plant and Machinery (CPM) Insurance
CPM insurance provides coverage for movable plant equipment and machinery such as bulldozers, cranes, and excavators, safeguarding against potential damage or loss.
Advanced Loss of Profit (ALOP) Insurance
ALOP insurance protects against financial losses or additional expenses resulting from delays in construction or infrastructure projects.
BPM Insurance (Boiler and Pressure Plant Insurance)
Designed for the maintenance and replacement of machinery, this insurance also extends to cover damages to third-party property or bodily injury caused by boiler operations.
EEI Insurance (Electronic Equipment Insurance)
A highly valuable policy for engineers, it offers comprehensive coverage against breakdowns or damages to electronic devices used in business operations.
MBD Insurance (Machinery Breakdown Insurance)
This policy protects against physical damage to machinery caused by unexpected accidents or unforeseen events.
How to Choose the Right Plan
Understand the Coverage Scope
With numerous engineering insurance products available, it can be challenging to grasp the coverage details for each. The first and most crucial step is to identify and understand your specific requirements to select a plan that suits your needs.
Insure the Right Equipment
Engineering insurance policies often specify the types of equipment they cover. For instance, while Machinery Breakdown Insurance and Electronic Equipment Insurance may overlap in some areas, they also include unique provisions exclusive to each. Ensure your policy covers the exact equipment you need protection for.
Reinstatement vs. Depreciation
Even after selecting the right insurance, understanding key clauses like reinstatement versus depreciation is critical. A reinstatement clause allows you to replace damaged equipment with the same or equivalent machinery but typically comes with higher premiums. However, this can be more advantageous for your business in the long run compared to a depreciation-based settlement.