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What is a Contractors’ All Risks (CAR) Insurance

Contractors’ All Risks Insurance is a policy that protects you throughout any building tasks you may do. Such works may involve civil engineering alterations to your current home or business, such as the installation of extra rooms, floors, or lifts, as well as the construction of new buildings. Coverage is provided for damages to contract works as well as damage or injury for which you may become liable to third parties.

The Contractors’ All Risks policy is a project-specific policy that is valid just for the length of the contract activity. There may also be cases where Contractors offer an Annual Contractors All Risks Policy covering a variety of contracts, generally capped at a certain amount for any one contract.

Third parties, such as subcontractors, may be wounded while working on the building site. It not only covers those related risks, but it also combines these two types of risks into a single policy that fills the gap between limitations that would otherwise occur if separate policies were used.

Buildings, water tanks, sewage treatment plans, flyovers, and airports are all popular projects for CAR insurance coverage.

Understanding Contractors’ All Risks (CAR) Insurance

CAR insurance plans are often taken out jointly by the contractor and the employer, with other parties like as finance firms having the option of being added to the policy. Since the insurance covers several parties, each retains the right to submit a claim against the insurer, however, all parties are responsible for alerting the insurer of any injuries and losses that may result in a claim.

A CAR insurance policy’s objective is to ensure that all parties on a project are protected, irrespective of the sort of damage to the property or who caused the harm. Underwriters of this sort of insurance lose their right to subrogation, which means that if they pay out funds to one party in the agreement, they cannot attempt to recover those amounts from some other party in the contract.

For instance, if the owner of a large building and the contractor working on the building are both covered by the same CAR insurance, the owner of the building can collect any losses caused by the contractor when a claim is submitted. The insurer, on the other hand, cannot seek reimbursement from the contractor.

Flood, wind, earthquakes, water damage, and mould, as well as building flaws and negligence, are common risks covered by CAR insurance; they generally do not cover natural wear and tear, wilful negligence, or bad craftsmanship.

Coverage for any damage to the contract works, including products such as tiles, stones, and fittings, both while they are being stored on-site and after they have been installed/used on the building. Coverage is provided on an All Risk basis, subject to the policy’s exclusions. The policy may provide coverage for property held by the insured on the contract site that will not be included in the works, such as during renovations. This is known as a ‘own surrounding property’ expansion, and a separate sum insured must be supplied, often by an architect, in order for such coverage to apply.

In addition to the above, this part may cover costs for debris removal in the event of an accident on site, architects, and protection for the contractor’s tools and equipment if the latter is included as a joined insured under the policy. It is important to note, however, that expenses for correcting deficiencies that would have been incurred regardless – without the incidence of such loss or damage – such as architect fees to change plans due to Planning Authority orders or debris removal after demolition due to inadequate works – are not indemnified/covered.

Special Considerations

CAR coverage may be extended to cover the interests of manufacturers, suppliers, contractors, and subcontractors. The policy can also be expanded to cover the following events:

  • Additional custom duty
  • Air freight
  • Damage to surrounding property
  • Debris removal
  • Earthquake
  • Escalation
  • Loss due to breakage of glass
  • Maintenance visits

Furthermore, CAR policies may be intended to cover losses incurred when a company’s start-up is delayed due to another covered loss. For example, if a property is destroyed and covered by CAR insurance, losses incurred as a consequence of a delay in opening the property while the damage is being repaired may be covered as well. CAR insurance can also be expanded to contain an escalation provision, cover terrorist activities, and cover excess third-party liability, among other less frequent circumstances.

Contact to learn more about Contractors’ All Risks (CAR) Insurance and how it can help your business.