EAR Insurance Malaysia: Erection All Risks Coverage for Machinery Installation

You're installing a new CNC machining centre worth RM3 million. During crane lifting, the rigging slips. The machine drops half a metre. The precision components are misaligned. The manufacturer says it needs full recalibration, and parts of the base structure may need replacement.

Your CAR policy? It covers building construction, not machinery installation. Your fire insurance? It covers the factory, not equipment being erected. The gap between these two policies is exactly where EAR insurance sits.

This guide explains what EAR insurance covers, when you need it instead of (or alongside) CAR, and how to structure it for M&E projects in Malaysia.

This guide covers:

• What EAR insurance covers
• EAR vs CAR: when to use which
• Who needs EAR insurance
• Coverage during testing and commissioning
• How to structure EAR for your project

What EAR Insurance Covers

EAR vs CAR: When to Use Which

This is the question most contractors and factory owners get wrong. The answer depends on the nature of the work, not the size of the project.

Testing and Commissioning Coverage

The testing and commissioning phase is where many EAR claims originate. Equipment being started up for the first time carries inherent risk.

Who Needs EAR Insurance

FAQ

What's the difference between EAR and CAR insurance?

CAR covers building and civil engineering construction. EAR covers erection, installation, testing, and commissioning of machinery and plant. If your project is primarily building works, you need CAR. If it's primarily machinery installation, you need EAR. Many projects need both.

Does EAR cover damage during commissioning?

Yes. EAR specifically covers the testing and commissioning phase, which is when equipment is most vulnerable to damage. This is one of the key differences from CAR, which doesn't typically extend to machinery commissioning.

Who pays for EAR insurance: the contractor or the project owner?

It depends on the contract. Some contracts require the erection contractor to arrange EAR. Others require the project owner to arrange it in joint names. Review the insurance clause in your contract.

Does my factory's existing insurance cover new machinery being installed?

Probably not. Your fire insurance or IAR policy covers existing assets. New machinery being installed, tested, and commissioned is typically excluded until handover. EAR bridges this gap.

Can EAR and CAR be combined in one policy?

Yes. For projects involving both building construction and machinery installation (like a new factory), insurers can structure combined CAR/EAR policies covering both work packages under one programme.

What's excluded from EAR insurance?

Standard exclusions include defective materials or workmanship (though resultant damage may be covered), wear and tear, gradual deterioration, and consequential losses like penalties or lost profits. Check your specific policy wording for the full exclusion list.

Foundation Conclusion

EAR insurance fills the gap that CAR and property insurance leave open during machinery installation and commissioning. If you're installing equipment, erecting steel structures, or commissioning plant, EAR is the policy that responds when things go wrong during the most vulnerable phase of your project.

Foundation structures EAR coverage for M&E contractors and factory operators across Malaysia. We can advise whether your project needs EAR, CAR, or both.

Talk to our risk specialists about EAR insurance for your project

Disclaimer: This article provides general guidance on EAR insurance coverage available in the Malaysian market as of March 2026. Policy terms, conditions, and availability vary by insurer. Always review your specific policy wording or consult a qualified insurance professional before making coverage decisions.