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Contractor's All Risk Policy
Shield contractors, architects, and engineers from financial losses due to unexpected accidents, damage, or third-party claims in construction projects.
What is Contractor’s All Risk Policy?
A contractor's all risk insurance policy, also known as CAR insurance, is like a
safety net for construction projects.It protects against unexpected problems and covers things like damage to
construction equipment, machinery, as well as third-party claims arising from
bodily injury and property damage.This insurance is important because it helps keep construction projects on track
and prevents financial losses, making sure they finish on time and within budget.
Features of Contractor’s All Risk Policy
Insurance coverage is applicable for civil engineering projects where the value of civil works is more than50% of the total contract value.
It operates during storage, erection/construction till completion.
Loss, damage, or destruction of property incurred due to any cause other than those excluded in the policy is covered.
It is widely demanded by construction firms and financiers involved in construction projects.
Who needs
Contractor’s All Risk Policy?
The contractor’s all risk insurance can be availed by those who are involved in any way in the construction business such as: Contractors , Purchaser or owner , Companies financing the project , Firms commissioned to carry out the work, including subcontractors You can also cover all participants under a single insurance contract for the whole project to avoid gaps in coverage.
Why get
Contractor’s All Risk Policy?
The contractor's all risk policy is a special type of insurance that helps protect construction workers from the unfortunate event of damage or destruction to their projects.It covers everything from small projects like offices, buildings, hospitals, and shopping complexes, to larger projects such as highways, dams, and tunnels.This policy provides coverage for accidental damage to the projects themselves, as well as any equipment or machinery owned by the contractors.In simple terms, it ensures that if something goes wrong during construction, the insurance will help cover the costs of repairs or replacements.
Coverages
Here are the common elements that are typically covered in a CAR policy in India
Construction Material Damage
It provides protection from physical loss or damage to construction materials and
equipment used in the construction process due to a covered peril. It may also
cover the cost of demolition and removal of damaged materials and cleanup of
debris.
Third-party Liability
Under this policy, the insured is protected from legal liability for accidental
damage or loss to a third party's property arising from construction work. It also
covers the legal liability for non-fatal and fatal injuries caused to a third person
due to the construction of the property.
Negligence and Human Errors
CAR insurance policies often include coverage for loss originating from
negligence and errors in the design, planning, or supervision of the construction
project. If negligence or human errors result in third-party injuries or property
damage, a CAR insurance policy may provide coverage for liability claims as
well. This includes legal defense costs and any settlements or judgments against
the insured party due to their negligence or errors.
Water Damage
A CAR insurance policy typically covers accidental water damage that occurs
during the construction process. The policy may provide coverage for the
resulting damage to the insured property or construction materials. It may also
cover loss or damage arising from the entry of water into the construction site or
the insured property due to heavy rainfall, storms, or other external factors.
Collapse
A CAR insurance policy covers both partial and total collapse of the insured
structure during the construction phase. The policy will provide coverage for the
repair or reconstruction costs associated with the collapse, up to the policy limits
and deductibles.
Faults in Construction
This coverage provides protection from reasonable costs and expenses incurred by the insured due to required attendance at court proceedings, hearings, trials, and depositions related to the defense of a claim.
Fire, Explosion, Lightning, and Aircraft Damage
This cover refers to the protection provided for losses or damage that occur at
the construction site, because of these specific perils.
It includes damage to the construction site, materials, equipment, and structures
due to fire-related incidents and explosions.
This may be caused by factors such as gas leaks and chemical reactions,
damage due to lightning-induced fires, electrical surges, and incidents where
aircraft collide with the construction site, equipment, or structures, causing
damage or destruction.
Storms, Floods, Cyclones, Earthquakes, and Allied Perils
A CAR insurance policy generally covers losses or damages to the construction
site, materials, equipment, or structures resulting from storms, overflowing rivers,
heavy rainfall, or other flood-related events, cyclonic events, tremors, other
earthquake-related factors, and other related perils.
It may also provide coverage for the cost of repairs, reconstruction, or
replacement necessitated by the covered perils mentioned above.
Exclusions
Commercial Crime insurance offers many exclusions. Some of the major exclusions in the insurance policy are given below -
About Contractor’s All Risk Policy
Who can purchase the contractor’s all risk insurance?
Contractor's All Risk insurance is available to everyone engaged in the construction
industry, including:
1. Purchaser or owner
2. Contractors
3. Companies that are funding the project
4. Companies hired to execute the work, including subcontractors
1. Purchaser or owner
2. Contractors
3. Companies that are funding the project
4. Companies hired to execute the work, including subcontractors
What is the method of calculating risk used by insurance companies?
An insurance company examines several aspects while calculating risks and
quoting the premium for the contractor's all risk insurance policy. These criteria
include the scope, location, cost, and time frame for the construction work.
How do I claim a contractor's all risk policy?
To file a claim under the contractor's all risk policy, please follow the steps below:
1. Inform your broker right away to report the damage/loss. He will assist you in the entire claim settlement process.
2. Following phone notification, the insurer must be notified in writing of the damage or incidence of a loss. The severity of property damage must be included in the written notification.
3. If the loss or damage is the result of a burglary or theft, the insured should notify
the police immediately. 4. The insurer sends a surveyor to conduct the survey.
5. The insured must now submit the completed claim form together with the accompanying documentation to the insurance company.
6. The following documents may be required-
7. The written statement of the claim, with information on the loss or damage to the property.
8. Technical damage report for machine claims.
9. Purchase invoices or delivery receipts.
10. A police report, if filed.
11. Estimate for repair or replacement.
1. Inform your broker right away to report the damage/loss. He will assist you in the entire claim settlement process.
2. Following phone notification, the insurer must be notified in writing of the damage or incidence of a loss. The severity of property damage must be included in the written notification.
3. If the loss or damage is the result of a burglary or theft, the insured should notify
the police immediately. 4. The insurer sends a surveyor to conduct the survey.
5. The insured must now submit the completed claim form together with the accompanying documentation to the insurance company.
6. The following documents may be required-
7. The written statement of the claim, with information on the loss or damage to the property.
8. Technical damage report for machine claims.
9. Purchase invoices or delivery receipts.
10. A police report, if filed.
11. Estimate for repair or replacement.
Is it mandatory for contractors to have an all-risk policy?
Though there is no specific law or regulation that mandates contractors to have
an All-Risk Insurance (CAR insurance) policy, in various cases the financier and
the project assigner do ask the contractor to have a CAR policy in place before
the project work inception.
So, it is often recommended that contractors obtain CAR insurance. Construction
projects involve various risks, including damage to the site, materials, and third-
party liabilities.
It can provide financial protection to the contractor in the event of accidents,
natural disasters, theft, or other unforeseen circumstances during the
construction process.
Why is the contractor all risk policy important?
1. Construction projects involve significant investments in materials, equipment, and
labor. The CAR policy provides financial protection to contractors and project
owners by covering the potential losses or damages that can occur during the
construction phase.
2. It helps mitigate the financial risks associated with accidents, natural disasters, theft, vandalism, and other unforeseen events. Thus, this policy can provide contractors with peace of mind, knowing that their project is protected in the event of an accident or damage. This can help contractors to focus on their work and avoid worrying about the financial implications of such incidents. Many clients may require contractors to have a CAR policy in place before they will award a contract. This is because they want to ensure that their project is protected in the event of an accident or damage.
2. It helps mitigate the financial risks associated with accidents, natural disasters, theft, vandalism, and other unforeseen events. Thus, this policy can provide contractors with peace of mind, knowing that their project is protected in the event of an accident or damage. This can help contractors to focus on their work and avoid worrying about the financial implications of such incidents. Many clients may require contractors to have a CAR policy in place before they will award a contract. This is because they want to ensure that their project is protected in the event of an accident or damage.
What does a cross liability mean in a contractor's all risk policy?
In a contractor's all risk (CAR) insurance policy, a 'cross liability' provision is a
key feature that addresses the potential legal liability of different parties involved
in a construction project. It ensures that each party is individually protected
against claims made by other parties covered under the same policy.
What is covered in the contractor's all risk policy?
Here are the common elements that are typically covered in a CAR policy in India-
1. Construction material damage
2. Third-party liability
3. Fire and allied perils
4. Collapse
5. Faults in construction
6. Negligence and human errors
7. Earthquake
8. Water damage
9. Storms, floods, cyclones, and tempests
1. Construction material damage
2. Third-party liability
3. Fire and allied perils
4. Collapse
5. Faults in construction
6. Negligence and human errors
7. Earthquake
8. Water damage
9. Storms, floods, cyclones, and tempests
In which risks does the contractor's all risk policy not apply?
1. The contractor's all risk policy (CAR) does not typically apply to the following
risks. However, some of these peril scans be covered under certain conditions
with an additional premium.
2. Nuclear risks like nuclear radiation or other nuclear incidents.
3. War risks like damage caused by war, invasion, acts of foreign enemy, terrorism, etc.
4. Damage caused by pollution or contamination.
2. Nuclear risks like nuclear radiation or other nuclear incidents.
3. War risks like damage caused by war, invasion, acts of foreign enemy, terrorism, etc.
4. Damage caused by pollution or contamination.
Is theft covered under the contractor’s all risk policy?
Yes. The contractor’s all risk policy covers theft that may happen in the project or
construction site.
