Contractors All Risk Insurance

What is contractors’ all–risk insurance?

Also known as CAR insurance for short, contractors’ all–risk insurance is a non-standard insurance policy that provides mass coverage for ongoing construction projects, which is especially useful for contractors, including builders, electricians, and plumbers. The primary types of risks for these are property damage or theft and third-party damage or injury claims.

For example, should you find yourself in the unfortunate situation of a half-completed property being destroyed by a fire or flood that neither you nor the customer was responsible for, you’ll need contractors’ all–risk insurance to pay for repairs.

This way, you won’t be out of pocket for the cost of redoing the work, and your client won’t be unhappy about having to pay twice.

While standard insurance policies only cover ‘named perils’ – i.e. the specific situations outlined in the contract – all-risk construction insurance is more flexible. The ‘all risk’ part means that all liabilities are covered unless otherwise specified (almost the opposite of ‘named perils’ insurance). In addition to structural warranties, we provide this type of CAR insurance at Architects Certificate.

Who is contractors’ all-risk insurance for?

The policy is usually taken out at the start of a construction project by both the employer and contractor. However, it’s used by anybody who is working on a construction site.

The policy covers both employer and contractor and includes any other parties or subcontractors involved in the construction project – including everyone from site manager to electricians and plumbers.

In the event of a claim, both employer and contractor must seek insurance from the policy to cover any costs.

What does contractors’ all–risk insurance cover?

A contractor’s all-risk policy should cover all of your equipment, materials, and employees on the building site for the duration of your project. Of course, this includes the structure itself, whichever stage of progress it may have reached, and any temporary buildings such as portable office units.

It’s possible to get separate policies to cover different areas, such as contract works insurance for the construction and tools then public liability insurance for third-party damages, but it’s far more cost-effective to roll these into one policy. As a comprehensive package, CAR insurance can cover:

• Contract works
• Public liability
• Employers’ liability
• Own plant or hired-in plant
• Privately owned tools or effects

You may also be able to extend this cover to include extras like legal expenses, non-negligence for damage to neighbouring properties, and more, including:

• Protection against personal injury: If a subcontractor claims for an injury sustained during a project, the insurance will help to cover the costs, including legal fees and medical bills.
• Property damage: If the property is damaged because of an incident during construction, the all-risk insurance will cover the costs of bringing the property back to a usable standard.
• Claims after completed projects: If a subcontractor or third party claims for damages caused during a project once it’s completed, the all-risk insurance will help cover the costs incurred for incidents while the policy was active.
• Loss or damage of equipment and materials: If any equipment or machinery is lost or stolen from the site during the construction project, your all-risk policy will help provide funds to replace the equipment so the project can continue.
• Protection against negligence: If a claim is made against you or a contractor for injury or damages due to negligence then you can make a claim to cover any costs.

As a contractor or developer, if you expect to sell the property, then the buyer’s own insurance provider will require you to have the appropriate insurance yourself.

What’s excluded from contractors’ all–risk insurance?

Being able to claim financial compensation for a variety of damages, losses, and injuries is extremely useful if something goes wrong. However, as with any policy, it can’t realistically cover every potential risk. This is why exclusions like these are specified in the contract:

• Professional indemnity – protects against mistakes and negligence in advice, design, or physical works.
• D&O – protects directors and officers against criminal, civil, or regulatory proceedings against managerial decisions and actions.
• Defective workmanship – a structural warranty protects yourself and the property owner or buyer against poor workmanship.
• Wear and tear – cosmetic damage or failure of equipment should be covered by the manufacturer’s warranty.
• Consequential losses – insurers will not cover any financial losses from taking too long to complete the project or carrying out redesigns.
• International projects – the policy should specify which countries it applies in, but it will not automatically cover working overseas.

The CAR policy should cover you against damages caused by external circumstances, such as theft, vandalism, fire, or third–party injuries, for the agreed-upon duration of the works. It usually won’t cover the above instances, or force majeure situations such as natural disasters or sudden wars.

How much does contractors’ all–risk insurance cost?

Since CAR insurance has a wider scope than other types of coverage, the premiums may be higher than you might expect. However, we’re happy to explain how your circumstances affect the cost of CAR insurance, including the scale, value, location, and duration of your building project.

Here are some common considerations that usually affect the cost of contractors’ all-risk insurance:

• Value of contract works
• Project type and location
• Level of security
• Contract length
• Annual or project-specific insurance

Please give ABC+ Warranty a call on 0161 928 8804, email info@architectscertificate.co.uk, or send a message via our online contact form to discuss your requirements for contractors’ all–risk coverage and obtain a no-obligation quote. Our expert team can provide what you need.