What is engineering insurance?

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PostPosted: Mon Dec 29, 2008 5:34 pm   Post subject: What is engineering insurance?  

All about engineering insurance...type of policies etc...any response will be greatly appreciated. Smile

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PostPosted: Mon Dec 29, 2008 7:48 pm   Post subject:   

No such thing as 'engineering insurance.' What is/are the exposure(s) you are wanting insured?


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PostPosted: Tue Dec 30, 2008 9:07 am   Post subject:   

Phil, I guess the OP is asking about the coverage an engineering firm may need to purchase in order to cover itself from business associated losses.

Well, OP may require the following coverage to protect his business from the unavoidable events and contingent financial losses.

  • Contractor All Risk Insurance

  • Machinery Breakdown Insurance

  • Contractors Plant & Machinery Insurance

  • Loss of Profit Following Machinery Breakdown Insurance

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PostPosted: Tue Dec 30, 2008 11:44 am   Post subject:   

Engineering insurance could be of the following types-

Accidental coverage- This is for covering fixed assets.

Computer coverage- This covers hi-tech computers from any physical damage.

Breakdown coverage- Covers defects associated with internal equipments.

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PostPosted: Wed Oct 21, 2009 5:05 pm   Post subject: engineering insurance types of covers  

Advance Loss of Profits

Boiler & Pressure Plant

Civil Engineering Completed Risk

Contractor's All Risks

Contractor's Plant & Machinery

Deterioration of Stocks

Erection All Risks

Industrial All Risks

Machinery Insurance Policy

Machinery Loss of Profit

Erection All Risks Policy

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

Scope of cover

This 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 incepts 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.

Sum Insured

Sum to be insured is the completely erected value of the plant and machinery inclusive of freight, custom duty and cost of erection.


Premium depends on various factors such as type, protection, experience of contractors, duration of the project, period of testing, etc.

Main Extension

Policy can be extended on payment of additional premium to cover

• Escalation

• Clearance and Removal of Debris

• Third Party Liability

• Maintenance

• Damage to Owner’s Surrounding Property

• Express Freight

• Additional Customs Duty

• Holiday and Overtime rates and Wages

Boilers And Pressure Plant Insurance


Steam Generating Boilers both fixed and unfixed against the risk of Explosion or Collapse.

Extensions At Additonal Premium

• Express freight

• Air freight

• Owners surrounding property

• Third part liability

• Additional custom duty

• Escalation Clause


• Loss or damage due to fire and allied perils.

• War and nuclear risks.

• Loss arising out of overload, experiment or test.

• Gradual developing flaws, defects, cracks or partial fractures.

• Failure of individual tubes.

• Explosions/ Collapse due to facts, existing at the time of commencing insurance, known to the insured.

• Consequential losses.

• Willful Negligence.

Damage by Chemical explosion except in recovery boilers and waste heat boiler.

Electronic Equipment Insurance

Scope of cover

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.

The Policy provides coverage for:

• Material damage to electronic equipment (which can include systems software) due to sudden and unforeseen events, under Section I

• Cost of external data media, including cost of reconstruction of data under Section II, as also increased cost of working under Section III. While Section I is compulsory, Section II and Section III are optional.

Sum Insured

Section I: New Replacement cost of the insured property including Freight, Erection cost, Customs Duty, if any.

Section II: Cost of restoring the external data media by replacing lost or damaged data media by new material and lost information.

Section III: Sum Insured should represent the hiring charges per hour for a substitute equipment for ensuring continued data processing for the period of indemnity specified, including personnel and transportation charges.

Significant Exclusions

The Policy does not cover losses / damages due to:

• Wear & tear, War, wilful act or wilful negligence, Aesthetic defects and consequential loss.

Machinery Loss Of Profits (MLOP)


Modern machinery loss of profits insurance is a suitable 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.

Sum Insured

The sum insured is made up of the operating profit and the standing charges (fixed) in the course of twelve successive calendar months. (i.e. normally the business year)

Scope of Coverage:

Coverage’s are the same as under machinery breakdown insurance. If the loss is admitted under machinery insurance, MLOP will be triggered subject to availability of cover.

Premium rates are broadly determined from the following factors:

• The general and the specific technical risk of the machinery to be inusred.

• The moral and technical hazard relating to the user.

• The effect of machinery breakdowns on the operating profit and standing charges (factor of relative importance)

• The reserve facilities and spare parts available.

• The possibilities of loss minimization

• The general economic and political conditions.

Indemnity Period

This represents the maximum time for which an insurer is liable for the loss of profit. Generally period limit is three, six, nine or twelve months.

Time Excess

Time excess is a number of days of interruption which has to be borne by the insured in the event of loss and is based on type of machineries, business insured, relative factors, etc.

Contractors All Risks Insurance

Scope of cover

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.

Cover incepts from the commencement of work or after unloading of 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.

Sum Insured

The Sum insured shall be the fully completed value of the contract works inclusive of all materials, wages, freights, and custom duty and materials or items supplied by the principal.


Premium depends on factors like type, contractors experience, duration of the project, etc.

Significant Exclusions

This Policy does not cover loss or damage due to willful misconduct, cessation of work whether total or partial, delay, damage due to faulty design, rectification of defective material and/or workmanship inventory losses etc. Policy is subject to deductible excess as stipulated in the tariff.

Main Extension

Main policy can be extended on payment of additional premium to cover

• Third Party Liability.

• Owner’s Surrounding Property.

• Escalation.

• Maintenance Cover.

• Clearance and Removal of Debris.

• Contractor's Plant and Machinery.

Machinery Breakdown Insurance

Scope of Cover

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

Significant Exclusions

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.

Sum Insured

Value proposed for insurance should be equal to new replacement cost including Freight, Erection Cost, Customs Duty, if any.


Rate of premium depends upon the type of machinery and other factors. Discounts are offered in respect of stand-by facility, availability of spares and favourable claims experience, subject to rules laid down in the Tariff.


Policy is subject to a compulsory Excess, which depends upon the value of machinery.

Main Extensions

• Air Freight

• Express Freight (excluding Air Freight) Overtime & Holiday Wages

• Insured’s own Surrounding Property

• Third Party Liability

Main exclusion:

• Faulty Design

• Defective material or casting

• Bad workmanship

• Manufacturing defects

• Mechanical / electrical breakdown or derangement of erection machinery & equipment

• Consequential losses

Contractors Plant And Machinery Insurance

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

Scope of cover

Contactors Plant & Machinery policy 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.

Sum Insured

Sum Insured of each item of machinery shall be the present day replacement cost. Sum insured is computed from replacement cost including freight, cost of erection and custom duty, if any.


Premium depends on various factors such as type of equipment, location of operation, etc.

Main Extension

Main policy can be extended on payment of additional premium to cover:

• Third Party Liability.

• Clearance and Removal of Debris.

• Additional Customs Duty.

• Overtime, Express freight.

• Owner’s Surrounding Property.

Main Exclusions

• Electrical or mechanical breakdown

• Wear and tear, rust, corrosion

• Willful act or willful negligence

• Loss/damage for which supplier/ manufacturer is responsible

• Consequential loss

• Policy s subject to deductible excess as stipulated therein

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PostPosted: Tue Nov 17, 2009 10:11 pm   Post subject:   

jeez, it doesn't get much more exhaustive than that!


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PostPosted: Tue Oct 18, 2011 10:45 am   Post subject: engineering insurance  

iwant to know about this kind of coverage

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m.elbehary @ misrins.com.

PostPosted: Thu Feb 06, 2014 8:31 am   Post subject: Insurance  

What does engineering insurance mean? Also, there must be some benefit attached to it. What are the disadvantages that one can actually encounter at the expense of engineering insurance?

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Eke Bose Nosa

PostPosted: Mon Mar 03, 2014 7:43 am   Post subject:   

"Engineering Insurance" probably means professional liability insurance -- coverage for design mistakes.


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