Q. What is Construction All Risk Insurance?
Construction All Risk Insurance / Contractors’ All Risk covers civil construction projects such as residential and office buildings, hospitals, schools, theatres, roads, railways, bridges, tunnels, airports, dams, weirs, irrigation and drainage facilities, canals and ports. In addition the following will also be covered:-
i. Preparatory work at the construction site such as site facilities, excavation and leveling work and temporary structures (e.g. access roads, diversion canals and protective embankments)
ii. Any materials to be used in the construction work stored at the site
The Contractors All Risk Insurance provides cover against a wide range of perils. Some of the covered perils are:
1. Fire, lightning, explosion, aircraft damage
2. Riot, strike, malicious act
3. Flood, inundation, storm, cyclone and allied perils
4. Landslide, subsidence and rockslide
5. Burglary and theft
6. Faults in erection
7. Human errors, negligence
8. Short circuiting, arcing, excess voltage
9. Electrical and mechanical breakdown
10. Collapse, damage due to foreign objects, impact damages
Q. What does this policy cover?
The policy offers coverage under two sections:-
Section I Material damage:- For physical loss, damage or destruction of the property due to any cause other than those specifically excluded in the policy.
Section II Third-party liability:- For the legal liability falling on the insured contractor as a result of bodily injury or property damage suffered by a third party.
Q. What is the sum insured?
This depends on the type of project, Sum Insured and duration of the project, and the voluntary excess opted for by the Insured. The premium can be paid in installments, when the policy period is more than 12 months
Q. What is the duration of this policy?
The cover comes into effect from the time of commencement of work or after the unloading of the insured property at the site, whichever is earlier, and expires on the date specified in the policy or handing of the project to Principal and engaging in commercial use whichever is earlier.
Q. What does this policy not cover?
The Policy will not cover any claim related to:-
1. Any damage or injury to contractor’s own workers.
2. Inventory losses
3. Consequential loss
4. Wear and tear
5. Faulty design
6. Willful act or willful negligence of the insured
7. Cessation of work
8. Defective material or bad workmanship
9. War and related perils
10. Nuclear reaction, nuclear radiation, or radioactive contamination
Q. What are the Add-On covers under the Contractor’s All Risk Insurance?
1. Express freight, Holiday and Overtime
2. Air freight
3. Breakage of glass
4. Additional customs duty
5. Removal of debris
6. Earthquake
7. Escalation
8. Storage at the Fabricator’s Premises/ Workshop
9. Construction, plant & machinery
10. Cross liability (In the event of a claim by one insured for which another insured covered by the same policy may be held liable)
11. Third party liability
12. Maintenance visits cover and Extended Maintenance
13. Owner’s surrounding property
14. Terrorism
15. Damage to the property to the insured site.
Q. Who can take a Construction All Risk (CAR) Insurance Policy?
A specialized insurance policy, known as construction all-risk insurance, is intended for individuals involved in civil construction businesses or projects, whether directly or indirectly. These may include contractors, sub-contractors, commissioned firms, owners or purchasers, and companies financing the project. If someone, such as a contractor or principal developer, is starting a new project, it is essential to obtain this insurance to cover various risks that may occur during the construction phase. This insurance policy provides coverage for a range of risks that could arise during construction, making it an essential safeguard for any construction-related business or project.
Q. What is the claim process of the Contractors All Risk Insurance Policy?
If you encounter any claims under the contractor all risk insurance policy, such as damage to the project site, it is important to notify our SecureNow team immediately via call or email. You will need to provide details of the nature and extent of the loss or damage to the project. Our claims expert will guide you through the necessary steps to be taken while you take all possible measures to minimize the loss. We will then notify the insurer of the claim and they will appoint a surveyor to inspect the site. Our team will work with you to ensure that you have all the necessary documents and follow the required steps outlined by the insurance company during the entire claims process.
About The Author
Pankaj
MBA Insurance and Risk
With seven years of expertise in the insurance sector, Pankaj is a seasoned authority in Construction All Risk (CAR) insurance. As a dedicated contributor to SecureNow’s blog and article platform, they adeptly unpack the intricacies of CAR policies. He is deeply committed to empowering construction professionals with comprehensive insights into risk mitigation and coverage nuances. Their proficiency in navigating insurance landscapes ensures readers receive current and actionable guidance. Pankaj‘s passion for fostering understanding and resilience within the construction industry has firmly established them as a trusted source of knowledge and support.
