Contractors All Risks (CAR) Policy

Contractors All Risks (CAR) Policy

Contractors All Risks (CAR) Policy – Let us assume that there is a building project for a gated community by a realtor with 500 apartments with facilities like parks, swimming pool, gym, hospital etc.

The project would involve the following activities in the process:

  • Procuring materials and equipment and transporting the same to the project site
  • Storing the materials and equipment on the site
  • Erecting the machineries and equipment
  • Commissioning of the project

All the above course of activities can either be done by the owners of the project or by outsourcing through contractors.

In any case, all these activities are prone to risks of damage and loss due to several perils such as fire, burglary, earthquake, breakage and so on.

Contractors’ All Risks (CAR) Policy is designed to protect the interests of contractors and principals in respect of civil engineering projects like buildings, bridges, tunnels and so on.

The policy provides an “All Risk” cover.

Every risk, which is not specifically excluded, is covered.

This means that almost any sudden and unforeseen loss or damage occurring during the period of insurance to the property insured on the construction site is indemnified.

The more important causes of losses indemnifiable under CAR insurance are:

  • Fire, lightning, and explosion
  • Flood
  • Windstorm
  • Earthquake
  • Theft and burglary
  • Accidental damage
  • Collapse and impact
  • Act of terrorism

The policy can be extended to cover third-party liability and other exposures.

Sum Insured

Sum insured is required to be equal to the estimated completed erected value of the contract works inclusive of materials, wages, construction costs, freight, customs duties and items supplied by the principal.

If the sum insured is less than the amount required to be insured, the insurers will apply the average to the extent of under insurance.

Cover shall commence from the commencement of work or after the uploading of the property insured at the site, whichever is earlier.

The cover expires when the completed part thereof is taken over or put into service. It also expires after the date specified in the policy.