Munich Re CAR/EAR Endorsement 004 (Extended Maintenance)

Purpose

Once a construction or erection project reaches completion, the main construction-phase cover ends and a shorter maintenance period begins, during which the contractor performs contractual defects-rectification obligations. Basic maintenance-visits cover only protects against damage the contractor itself causes to the works while attending during such visits. Munich Re endorsement 004 (Extended Maintenance) goes further, also covering loss or damage whose cause arose during the construction or erection period but which is first discovered or reported only during the subsequent maintenance period.

Effect and limits

This extension creates a seamless bridge between construction-phase and maintenance-period cover for latent, later-manifesting consequences of defects, but remains subject to the same exclusions as the underlying policy – including any agreed defects exclusion clauses of the LEG/DE series: if a design defect is excluded or restricted under the main policy, the same restriction applies to the extended maintenance cover. Purely routine upkeep such as maintenance, staff training or ordinary plant operation remains expressly uninsured.

Negotiation and practice

Because distinguishing “caused during construction but discovered later” from ordinary operational damage after handover raises interpretation questions in practice, a clear contractual definition of the completion date for each section of the works is advisable, particularly where handover takes place in phases across different sections.