Contractors’ all risks (CAR) insurance is a non-standard insurance policy that provides coverage for property damage and third-party injury or damage claims, the two primary types of risks on construction projects. Damage to property can include improper construction of structures, the damage that happens during a renovation, and damage to temporary work erected on-site.
Third parties, including subcontractors, may become injured while working at the construction site. CAR insurance not only covers those associated risks but also bridges these two types of risks into a common policy designed to cover the gap between exclusions that would otherwise exist if using separate policies. CAR insurance coverage is common for construction projects involving buildings, water tanks, sewage treatment plans, flyovers, and airports.
KEY TAKEAWAYS
- Contractors’ all risks (CAR) insurance is a non-standard insurance policy that provides coverage for property damage and third-party injury or damage claims.
- Those are the two primary types of risks on construction projects.
- Damage to property can include improper construction of structures, the damage that happens during a renovation, and damage to temporary work erected on-site.
- Third parties, including subcontractors, may also suffer injuries while working at the construction site.
- The goal of a CAR insurance policy is to cover all parties on a project.
Understanding CAR Insurance
Typically, both contractor and employer jointly take out CAR insurance policies. Other parties such as financing companies have the option of being named to the policy. Because multiple parties are included in the policy, each retains the right to file a claim against the insurer. All parties have the duty to inform the insurer of any injuries and damages that may result in a claim.
The goal of a CAR insurance policy is to ensure that all parties on a project are covered, regardless of the type of damage to the property or who caused the damage.
Extending CAR Coverage
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