Engineering Insurance in India — A Detailed Overview
Types, phases, and principles of engineering insurance — written clearly for blogs, training notes, or publication.
Overview of the Engineering Insurance Market in India
Engineering Insurance forms a crucial component of the miscellaneous insurance segment within the Indian general insurance market. It covers risks related to engineering projects, machinery, equipment and installations during both construction and operational stages.
There is no insurer in India that writes only engineering business; instead, all general insurers maintain specialized Engineering Departments responsible for product development, technical underwriting, marketing, and claims — supported by qualified engineers.
Types of Engineering Insurance Policies
Engineering policies are broadly classified by the project phase:
Construction Phase Insurance (Period / One-time policies)
Designed for the duration of a project — usually issued for the contract period.
- Contractor's All Risks (CAR) — Covers civil construction projects such as roads, bridges and buildings.
- Erection All Risks (EAR) / Storage-cum-Erection (SCE) — For installation and erection of plant & machinery.
- Marine-cum-Erection (MCE) — Transit + storage + erection cover for project equipment.
- Contract Works (CW) — Covers works executed under construction contracts.
- Contractor's Plant & Machinery (CPM) — Covers construction machinery (cranes, excavators).
- Advance Loss of Profits (ALOP) / Delay in Start-Up (DSU) — Financial loss due to delay caused by insured material damage.
Operational Phase Insurance (Annual policies)
Protects installed equipment and facilities after the project is commissioned. Currently, combined construction + operation policies are not permitted in India.
- Machinery Breakdown (MB / MBD) — Covers sudden accidental breakdown of industrial machinery.
- Boiler & Pressure Plant (BPP) — Covers explosion/implosion of boilers and pressure vessels.
- Electronic Equipment Insurance (EEI) — For computers, medical devices, telecom systems, etc.
- Deterioration of Stocks (DOS) — Spoilage due to refrigeration or cold storage failure.
- Civil Engineering Completed Risks (CECR) — For completed civil structures like dams, tunnels and bridges.
- Machinery Loss of Profit (MLOP) — Loss of profit following machinery breakdown or boiler explosion.
| Policy | Purpose |
|---|---|
| CAR | Cover for civil construction works |
| EAR / SCE | Cover for erection and installation |
| MCE | Transit + storage + erection combined cover |
| ALOP / DSU | Financial protection against delay in project start |
| MB / MBD | Repair cost and business interruption for machinery |
Principles Applicable to Engineering Insurance
The general insurance principles that apply to engineering insurance include:
- Utmost Good Faith — Both parties must disclose all material facts honestly.
- Insurable Interest — The insured must have a financial stake in the insured property.
- Indemnity — Compensation should restore the insured to their pre-loss financial position, not create a profit.
- Subrogation & Contribution — Rights for the insurer to recover from third parties and share liability between insurers.
- Proximate Cause — The nearest cause that sets an event in motion determines claim validity.
Conclusion
Engineering Insurance is essential for safeguarding India's infrastructure and industrial investments. With specialist engineering teams, insurers provide tailored technical underwriting and claims handling for complex engineering exposures.
If you want this as a downloadable PDF, a blog-ready WordPress template, or want the HTML minified, click below.
great
ReplyDeletePost a Comment