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Contractors All Risk (CAR)


CAR policy may be effected by the interested parties in the project but primarily by Principal or by the Contractor engaged for the work and generally includes all sub-contractors. The cover begins from the start except for items of Construction Plant and the like. These are generally only covered after they have been unloaded at the site. The cover terminates when the completed project is handed over or any completed part is taken over or put into service. In respect of Construction Plant and the like, cover terminates when removed from the site. CAR consists of two main types of work: building works and civil works.

Building Works

Building works involves the construction of dwellings, office blocks, universities, stadiums, hospitals and factories.

Important features include:

  1. The location (Metropolitan/Country)
  2. Demolition
  3. Exposure to adjoining properties and proximity to roads and other structures
  4. Excavation depth and precautions taken to safeguard adjacent property
  5. Exposure to the public
  6. Use of cranes
  7. Type and method of construction
  8. Exposure to contractors/sub-contractors, their employees and all workers on site

Civil Works

Civil works involves the construction of roads, airports, railways, tunnels, bridges, viaducts, dams, pipelines and the like. This type of work generally being outdoors and thus exposed to the elements, usually attracts the most frequent and serious losses. In general terms the premium is determined on the basis of the following factors:

  1. Exposure of site to the elements
  2. Design features and building materials
  3. Construction techniques
  4. Measures provided to ensure safe execution of project

Insured’s legal liability for compensation in respect of personal injury or property damage to third parties arising from the contract works is covered under Third Party Liability Insurance. The policy can be extended to cover:

  1. Removal of Debris
  2. Architects, Engineers or Surveyors Fees
  3. Expediting Expenses.
  4. Surrounding property etc.

A maintenance period is usually incorporated in most CAR policies and it is normal for the policy to cover this period in addition to the period of construction. The maintenance cover is for loss or damage to the works occurring during the maintenance period stipulated in the provisions of the maintenance clauses in the contract relating to the works.