Co-authored by Adam Pryor
Traditionally, construction and engineering insurance covers for
onshore projects seek to provide property or income protection. At
the most basic level, the works (and limited number of liabilities)
are ordinarily insured pursuant to Erection All Risks
("EAR") policies. EAR policies generally cover all risk
of damage to the works, unless specifically excluded. Typical
exclusions include damage or defects caused by negligent design and
the cost of correcting negligent workmanship.
In the last decade, the UAE market has become far more aware of
the risks arising from defective design in complex infrastructure
projects. It has become more common in large projects to see EAR
covers with write backs, to various degrees, for loss or damage
caused by, say, defective design. These are commonly based on the
wordings prepared by the London Engineering Group (i.e. the LEG2 or
LEG3 exclusions).
