CONTRACTORS ALL RISK
ABOUT CONTRACTORS ALL RISK
Contractors All Risk insurance ‘CAR’ (also referred to as Contract Works Insurance or Construction Insurance) typically provides All Risks cover during the construction period.
It provides complete protection for all types of civil engineering works against different types of construction risks such as fire, lightning, flood, storm, earthquake, cyclone and other accidental or malicious damage.
CAR contracts exclude cover for risks such as defects due to wear & tear, obsolescence (outmodedness or oldness), rust & mildew, loss and damage arising out of war, nuclear disasters, political upheaval and for faulty workmanship or faulty design.Cover for faulty workmanship, faulty design and errors & omissions are more specifically insured under Design & Construct Professional Indemnity policies.
Contractors’ All Risks insurance is usually taken out in the joint names of the Contractor and the Employer. Other interested parties, such as funders, often ask to be added as a joint name or request that their insurable interest be noted on the policy. Most commonly, CAR policies are underwritten on an Annual basis – covering all projects for the year as well as plant and machinery. But they’re also available for Single projects.
The Sum Insured should be the fully completed value of the Contract Works, inclusive of all materials or items supplied by the Employer.
ONCE-OFF VS ANNUAL
FREQUENTLY ASKED QUESTIONS
Why is Contractor’s All Risk insurance necessary?
Construction projects typically involve two primary types of risk: damage to the property, and third-party claims for injury or damage. Contractors All Risk Insurance covers the work you are currently doing on a building site and can be structured to pay for the cost of repairing or redoing anything that’s damaged or destroyed, including the cost of the labour, materials and tools.
For example, if you were halfway through building an extension on the home of a customer and that extension was destroyed by fire, who would pay the bill? The homeowner would be responsible for damage to the existing structure but as the Contractor, you would be responsible for the Contract Works.
With Contractors All Risks insurance, the insurance company will pay for the partially completed extension to be re-built, so you don’t have to. Without this level of protection, having to pay for the materials and labour costs in rebuilding the extension could cost a small fortune and may even render your company bankrupt.
The responsibility for getting Contractor’s All Risks insurance falls to the Contractor. But the policy can also be useful to several different trades including: Plumbers, Carpenters, Electricians etc.
To ensure you get the right cover for your needs, It’s best to discuss it with us before purchasing your policy.
What IS Covered?
The policy provides cover on an All Risks basis for physical loss or damage to the insured property.
The Contract Works should cover the full replacement value of the work being undertaken i.e. the cost of rebuilding at today’s prices.
Employer supplied materials (Free-Issue Material) should be insured too and some policies require that the professional costs (including architect and legal fees) as well as debris removal be a part of this declared value.
Very often the Employer will supply their own goods or materials e.g. the floor tiles in a house construction. These can be included in the insurance so long as their value has been declared in the Sums Insured.
Definition of Free-Issue Material: Material supplied by the Employer for incorporation into the Contract Works without charge to the Contractor.
The most common claims on Contract All Risk insurance policies, involve theft of materials, materials being damaged whilst en route to site, surrounding property being damaged whilst the project is being completed, rain falling on exposed parts of existing structures, damage by storms and lightning.
What is NOT Covered?
Just because this policy is broad doesn’t mean it covers absolutely everything. Every insurance policy has limits.
Your Tools & Equipment
Most CAR policies cover your tools and equipment while they’re on the job site or in transit.
However, some policies might not include expensive equipment such as bulldozers or diggers. Furthermore, while your equipment may be covered, the equipment belonging to your subcontractors might not be.
Faulty Design or Workmanship
CAR insurance is designed to cover accidents. But what happens if an accident on the project site is your fault? Depending on your policy, if you or one of the other insured parties are found to be at-fault for an incident, a CAR might not cover it.
While your CAR policy may cover your tools and equipment while they’re in transit, it probably won’t cover your work vehicle. If one of your employees gets in an accident on the way to the job site while driving a company vehicle, or you accidentally back your work truck into a concrete support beam and dent it, you’ll need additional coverage to make sure you don’t suffer a financial loss.
Loss due to delay or loss of any kind or description whatsoever including penalties, lack of performance, loss of contract, liquidated damages.
Existing Property – unless it’s been specifically included in the cover.
Every insurance policy is different. It’s important to read through yours, especially the exclusions, to make sure you understand what is covered and what isn’t.
Asking us to help you go through your policy carefully before you buy it is the best way to make sure you’re properly insured.
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THE LEGAL STUFF
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