Munich Re CAR/EAR Endorsement 006 (Overtime/Express Freight)

Purpose

Following a covered loss on a construction or erection project, rapid reinstatement is often commercially critical, for example to protect downstream milestones or the commissioning date. The underlying policy typically only reimburses repair costs incurred at ordinary working hours and standard freight terms. Munich Re endorsement 006 extends cover to the extra costs incurred where overtime, night work, work on public holidays or express freight (excluding airfreight) is used to speed up reinstatement.

Effect and limits

The extension only covers extra costs causally connected with a loss otherwise recoverable under the policy in respect of insured items; it does not create standalone cover for delay without an underlying physical loss. Airfreight is typically expressly excluded and insurable only under a separate extension. If the sum insured for the damaged item is underinsured, the indemnity for the extra costs is reduced proportionately.

Negotiation and practice

On projects with tight schedules or delay-related liquidated damages, combining this endorsement with delay-in-start-up or advance-loss-of-profit cover is worthwhile, since endorsement 006 only accelerates physical reinstatement costs and does not cover financial consequential loss from the schedule delay itself. The additional premium is usually calculated as a percentage of the sum insured and is regularly negotiated on larger projects.