Contractor All Risk Insurance (CAR Policy)

Contractor all risk insurance (sometimes referred to as 'contract works insurance’) also called as CAR Policy, that covers all risks normally associated with a construction project.

Contractor all risk insurance is a type of insurance in the construction sector.

Contractors' all risks (CAR) insurance is a non-standard insurance policy that provides coverage for property damage and third-party injury or damage claims, the two primary types of risks on construction projects. Damage to property can include improper construction of structures, damage that happens during a renovation, and damage to temporary work erected on-site.

Hello everyone, If you build property for a client the thing is you are responsible for that property till you hand it over to your client. Sometime that the property can be damage, goes on fire, or there is a storm and the gable walls & roof are damaged. Your client won’t be paying you to make the property good or re-build. That cost will fall on you. A Contractor All Risk Insurance can cover the damage to “the works” (your new build) from the like of storm, flood, theft, malicious damage etc. So you’re not out of pocket.

Contractor All Risk Insurance - CAR Policy in Construction Contract

Third parties including subcontractors may also become injured while working at the construction site. CAR insurance not only covers those associated risks but also bridges these two types of risks into a common policy designed to cover the gap between exclusions that would otherwise exist if using separate policies.

CAR insurance coverage is common for such construction projects as buildings, water tanks, sewage treatment plans, flyovers, and airports.

As a contractor you’ll want to insure your own plant & machinery onsite for damage and loss. The contractors all risks policy can insure loss or damage to your own plant & equipment from the like of fire storm flood etc.

Also you can have the Contractor All Risk Insurance insure loss or damage to hired-in plant & equipment from fire, storm, flood, malicious damage theft etc. You can even insure the loss of hire charges levied on you by hiring company as a result of damage or theft to hired-in equipment.

Other parties of Associated with Contractor All Risk Insurance

Typically, both contractor and employer jointly take out CAR insurance policies, with other parties
such as financing companies having the option of being named to the policy. Because multiple
parties are included in the policy, they each retain the right to file a claim against the insurer,
although all parties have the duty of informing the insurer of any injuries and damages that may
result in a claim.

The goal of a CAR insurance policy is to ensure all parties are covered on a project, regardless of the
type of damage to the property or who caused the damage. Insurers who underwrite this type of
policy lose the right to subrogation, meaning that if it pays out funds to one party in the contract, it
cannot seek to recover those funds from another party in the contract.
For example, if the owner of a large building and the contractor working on the building are on the
same CAR policy, any damages to the building caused by the contractor can be recovered by the
building owner when a claim is filed. The insurer, however, cannot seek to recover funds from the
contractor.

What does Contractor All Risk Insurance cover?

The policy covers the risk associated with civil engineering works;

Residential, Commercial Building, Airport, Terminal building

Factory, Sheds, hangers, warehouses

Roads, Flyovers, Subways,

Runways, aprons & Air Taxiways at Airports.

Bridges, Dams, Tunnels etc.

What does the contractor all risk insurance not cover?

Loss of materials not traceable to an event, e.g. discovery of some shortages during inventory checking, tracing the cause of which, cannot be attributed to an event.

Normal wear and tears, gradual deterioration due to atmospheric and other conditions, rust, scratching of painted surfaces or breakages of glass.

Loss due to faulty design, defective material or casting, bad workmanship, other than faults in erection.

Loss arising out of cost necessary for rectification or correction of any error during erection, unless resulting in physical loss or damage.

Scope of Cover - “CAR” Policy

It covers all physical losses and damages arising from;

• Location Risks: fire, lightning, theft, burglary, and house breaking.
• Handling Risks: Impact from falling objects, collision, failures, of cranes or tackles etc.
• Testing & Commissioning Risks: Failures of safety devices, leakage of electricity, insulation failures, short circuit, explosion (applicable to EAR Policy only.)
• Risk of Human element: Carelessness, negligence, faults in erection, strike & riot, malicious damage, terrorism.
• Acts of God: storm, tempest, hurricane, flood, inundation, subsidence, landslide, rockslide and earthquake.

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