Engineering Insurance in the UAE: CAR, EAR, Machinery & Decennial Liability (2026)

Quick answer: Engineering insurance in the UAE covers construction works, the machinery being installed, and the plant and equipment businesses depend on. The main policies are:

Contractors' All Risks (CAR): buildings and civil works during construction, including third-party liability.
Erection All Risks (EAR): plant and machinery being installed, tested and commissioned.
Contractors' Plant and Machinery (CPM).
Machinery Breakdown (MB).
Electronic Equipment (EE).

In Dubai, a contractor must hold an insurance policy covering the works and third-party liability to get a construction permit, under Executive Council Resolution No. 28 of 2022.

This guide explains each engineering cover, what the law and contracts require, decennial liability under the new UAE Civil Code, what affects the price and how to compare quotes. Compare engineering insurance quotes on insuringU.

Engineering insurance in the UAE: key facts

Dubai construction permits: Executive Council Resolution No. 28 of 2022 requires the contractor to submit an insurance policy covering material damage and civil liability to third parties. It applies to construction, demolition, and alterations or additions over 300 m². The policy must stay valid from the permit until completion, plus one year for building works. It replaces the old cash deposits and guarantees.
Decennial liability: under the new UAE Civil Code (Federal Decree-Law No. 25 of 2025, Articles 821–824, in force from 1 June 2026), the main contractor and the engineer are jointly liable for 10 years for defects that affect a building's safety or stability. Any clause that limits this liability is void.
Decennial liability insurance: commonly required by the contract on major projects. It is not a general legal requirement.
VAT: engineering insurance carries 5% VAT.

Types of engineering insurance

Contractors' All Risks (CAR)

CAR covers the contract works and the materials on site against sudden physical loss or damage, such as fire, flood, storm, theft, collapse and accidental damage, for the construction period. It also covers third-party liability for injury or property damage caused by the works. Common extensions include:

the maintenance (defects liability) period, usually 12 months;
debris removal and professional fees;
the principal's surrounding property;
vibration or removal of support that damages neighbouring property.

Erection All Risks (EAR)

EAR covers plant, machinery and steel structures from delivery to site, through erection, to testing and commissioning. It includes third-party liability. It suits power, water, MEP and industrial projects. Many projects need both CAR and EAR.

Contractors' Plant and Machinery (CPM)

CPM is an annual policy for owned or hired-in construction plant, such as cranes, excavators and generators, against accidental damage and theft on site or in transit between sites.

Machinery Breakdown (MB) and loss of profits

MB covers sudden and unforeseen mechanical or electrical breakdown of machinery in operation, for example in factories, hotels and buildings. Machinery loss of profits (MLOP) adds the income lost while the machine is being repaired. Advance loss of profits (ALOP) covers income lost when a project finishes late because of an insured loss.

Electronic Equipment (EE)

EE covers computers, servers, medical, laboratory and telecoms equipment against accidental damage. It can include external data media and the increased cost of working.

Boiler and pressure vessel (BPV)

BPV covers explosion or collapse of boilers and pressure vessels, and the resulting damage.

Who arranges CAR insurance: the contractor or the owner?

The contract decides. In Dubai, the construction-permit rule places the obligation on the contractor. Some large employers or developers arrange a project-wide policy themselves, called an owner-controlled programme, and name the contractors on it. Always check the insurance clause of your contract. It sets the minimum limits, the named insureds, the waiver of subrogation and the maximum excess.

What affects the price?

The contract value, including free-issue materials.
The type of construction, its height and depth.
The site location and exposure to flooding.
The construction and maintenance periods.
The contractor's experience and loss record.
The third-party liability limit and the excess.
For plant and machinery: its value, age and use.

After the April 2024 floods, insurers look closely at site drainage and flood exposure. Well-managed sites with a clean loss record get better terms.

Common exclusions

The cost of correcting faulty design, materials or workmanship. The resulting damage is often covered, depending on the extension chosen.
Wear and tear, gradual deterioration and corrosion.
Penalties for late completion, and loss of contract.
War and terrorism, unless you add them.
For machinery breakdown: damage from gradual wear, and losses covered by a manufacturer's guarantee.

How to claim

Make the site safe and prevent further damage.
Notify the insurer immediately, and before repairs where possible, so a loss adjuster can inspect.
Keep the evidence: photos, site diaries, the method statements, and the invoices for repair and extra costs.
For third-party claims, don't admit liability. Pass all correspondence to the insurer.

How to compare engineering insurance quotes

Start from the contract's insurance clause: covers, limits, parties and excess.
Set the sum insured at the full contract value plus free-issue materials. For plant, use the new replacement value.
Check the maintenance period, the design-defect extension and the natural-catastrophe excess.
Declare hired-in plant and its hire values.
For operating businesses, machinery breakdown is often paired with loss-of-profits cover.

Get engineering insurance quotes on insuringU. Tell us about the project or the equipment.

Frequently asked questions

Is CAR insurance mandatory in Dubai?

For permit-regulated construction works, yes. Executive Council Resolution No. 28 of 2022 requires the contractor to submit a policy covering the works and third-party liability to get a building permit. It must stay valid until completion plus one year for building works.

What is the difference between CAR and EAR insurance?

CAR is for civil and building works. EAR is for plant and machinery being installed and commissioned. Projects with major mechanical and electrical content often need both.

What is decennial liability in the UAE?

It is the 10-year strict liability of the main contractor and engineer for defects that affect a building's safety or stability. It is now set out in Articles 821–824 of the Civil Code (Federal Decree-Law No. 25 of 2025), and it cannot be limited by contract.

Is decennial liability insurance mandatory?

The liability itself comes from the law. Insurance to cover it is not a general legal requirement, but many major project contracts require it.

Does CAR insurance cover third-party damage?

Yes. CAR policies include a third-party liability section for injury or property damage to others caused by the works, up to the stated limit.

Is hired-in plant covered?

Under a contractors' plant and machinery policy, yes, if it is declared with its hire values.

Does machinery breakdown insurance cover loss of profit?

Not on its own. Add machinery loss of profits (MLOP) to cover the income lost during repairs.

Related guides

Sources

Last reviewed: 29 September 2026. This guide is general information, not legal or insurance advice. Your contract's insurance clause and the policy wording decide what is covered. insuringU is a brand of Affinity International Insurance Prices Comparison L.L.C., Dubai trade licence 1352749, licensed by the Central Bank of the UAE as an insurance price comparison website.