Understanding CECR (Civil Engineering Completed Risk) policy




CECR policy is a named perils cover subject to specific exclusions. This policy can be taken by Principal after completion & final taking over of project. This can also be taken by Contractors after completion of Civil Engg. works if they are contractually responsible to maintain and /or operate before final handing over to Principals. As per tariff wordings this policy covers unforeseen and sudden physical loss or damage to insured property caused by –


1. Fire.
2. Lightning.
3. Explosion/Implosion.
4. Riot, Strike, Malicious Damage and Terrorism as per Riot, Strike and Malicious damage clause printed hereon.
5. Impact by any Rail/Road or water borne vehicle or animal.
6. Storm, Cyclone, Typhoon, Tempest, Hurricane, Tornado, Flood and Inundation, Wave action of water.
7. Subsidence and Landslide (Including Rock slide) damage.
8. Earthquake Fire and Shock (Including flood due to earthquake), Tsunami
9. Frost, avalanche, ice.

Now the biggest question comes whether damage to insured property by Collapse of structure is also covered?

Answer is "Yes" although, the term “Collapse” is not appearing on the face of policy, but based on additional perils & specific exclusions under the policy Collapse of insured property will be covered if it occurs arising out of following cause

  1. Wave action of water excluding wear and tear, gradual deterioration
  2. The normal cracking, settlement or bedding down of new structures unless it is proof as wear and tear, gradual deterioration
  3. The settlement or movement of made up ground
  4. Coastal or river erosion
  5. Defective design or workmanship or use of defective materials
  6. Demolition, construction, structural alterations or repair of any property or groundworks or excavations excluding aggravated by failure. 
In view of the same it is to be noted that this policy coverage is much wider than Standard Fire & Sp. Perils Policy cover because damage to property by Collapse will not be payable under SFSP policy.
  





Comments

  1. Capt Sanjay B MoholkarJuly 22, 2020 at 1:45 PM

    How is collapse defined? Under which clause or peril Collapse would be termed being covered? If flood and inundation then cause of loss to be proved accordingly.

    ReplyDelete
    Replies
    1. V.P SharmaJuly 23, 2020 at 11:33 AM

      Collapse is ultimate outcome of operation of peril which causes physical loss or damage to the insured property. If it is caused due to a peril covered under the policy like flood earthquake etc loss will be admissible under the policy but if the peril causing collapse falls under the list of exclusions, it shall not be payable.

      Delete
  2. Ritika MasurekarAugust 3, 2020 at 5:36 PM

    Very informative

    ReplyDelete
  3. UnknownAugust 7, 2020 at 3:51 AM

    Sir, you have mentioned that,if contractor are contractually responsible to maintain and /or operate before final handing over to Principals then they can take the policy. It can be taken during Defect Liability Period or for HAM Projects after completion of Construction?

    ReplyDelete
    Replies
    1. V.P SharmaAugust 8, 2020 at 3:26 PM

      It can be taken in both situations.

      Delete
    2. V.P SharmaAugust 8, 2020 at 3:27 PM

      However contractor will have to prove his insurable interest in the property before taking operational cover for the completed completed project

      Delete
  4. KrishnenduAugust 8, 2020 at 4:18 PM

    Sir,some time a building collapsed without any reason just for being old or design defect. Is it covered in that case?

    ReplyDelete
    Replies
    1. V.P SharmaAugust 9, 2020 at 1:13 PM

      No, a collapse due to old age or design defect is not payable under CECR policy

      Delete
    2. V.P SharmaAugust 9, 2020 at 1:18 PM

      If the bridge has become very old, it would be difficult to establish that it has collapsed due to design defect.
      Had this incident took place in initial stages, we could have paid such loss provided it is proved to be a case of design defect.

      Delete
  5. Govardhan KalyanpurAugust 11, 2020 at 9:32 AM

    It's quite informative and collapse is the differentiator between SFSPP and CECR

    ReplyDelete

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