CAR
CONTRACTORS’ ALL RISKS
INSURANCE
Rohana Alagiyage
Part I – Basic Policy Form
Part II – Standstill Insurance
CAR Vs EAR
EAR- Erection All Risk
Determining factor- Value of Erection &
Installation works
Less than 50%
Above 50%
- CAR
- EAR
SUBJECT MATTER INSURED
CAR may be taken out for all building
and civil engineering projects, such as:
Residential and office buildings, hospitals,
schools, theatres
 Production facilities
 Infrastructure facilities, airports
 Bridges, dams, tunnels and harbors (wet
works)
INSURED PARTIES - Jointly
CAR insurance should be concluded for all
parties concerned to avoid overlaps or gaps in
cover:
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The principal (employer) &/or
The main contractor &/or
Subcontractors &/or*
Project managers &/or
Suppliers, if any*.
* Un-named
SCOPE OF COVER – Two Sections
SECTION 1- Material Damage to:
 Contract works (permanent and temporary works
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forming part of the contract)
Removable of debris
Professional Fees
Free issue materials
Construction Equipment ( Site offices, storage
sheds, silos, scaffolding, utilities etc)
Construction machinery (earthmoving equipment,
cranes, site vehicles)
Principal’s existing property
SECTION 2 - Third party liability:
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Bodily injury & Property Damage
SECTION 1- Material Damage
Cover on ALL RISK basis against
unforeseen and sudden physical loss or
damage to the insured property from ANY
cause other than those specifically
excluded
SECTION 2
Where the Insured becomes legally liable to
pay as damages consequent upon :
 Accidental bodily injury to third parties
 Accidental loss or damages to property
owned by third party.
Occurring in direct connection with construction works insured under
Section 1
SCOPE OF COVER - Cont
General Exclusions:
 Political risks, war or warlike operations,
SRCC
 Nuclear, radioactive contamination
 Willful act or willful negligence of the
insured or their representatives
 Cessation of work whether total or partial
SCOPE OF COVER - Cont
Special Exclusions to section I:
 Consequential loss of any kind
 Faulty design
 Defective material / workmanship (faulty part only)
 Mechanical and/or electrical breakdown
 Wear and tear, corrosion, gradual deterioration
 Road vehicles, waterborne vessels and air crafts
 Inventory losses
SCOPE OF COVER - Cont
Special Exclusions to section II:
 Property insured or insurable under Section I
 Vibration, removal, weakening of support
 Liability for bodily injury to employee/ workmen of
insured parties
 Liability for damage to property belonging to insured
parties
 Motor , Marine & Aviation liability
 Contractual liability
PERIOD OF COVER
Contractors’ All Risks Insurance
Works cover
Maintenance
period
Operational covers (Fire, Allied
perils, TPL)
Inception date
Commencement of works
PERIOD OF COVER
Cover ATTACHES from
 the commencement of work or
 after the insured items have been unloaded at site or
 the inception date as specified in the policy
Whichever is later
And TERMINATES when
 the completed structure is taken over or
 put into service or
 the expiry date specified in the policy
Whichever is earlier
CALCULATION OF SUM INSURED
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SI must be equal to the amount stated in the building contract
plus a value of any free issue material
Contractually, insured contractor may be required (e.g. Under
FIDIC contracts) to include 15% of CV towards costs of
rectification, removal of debris and professional fees
Separate sums insured for:
Construction machinery and construction plant and equipment
(equal to NRV)
Existing property and clearance of debris (Loss limits)
Third party liability – Section II (as per contact conditions)
PRINCIPLE EXTENSIONS TO BASIC CAR
COVER
Section I:
 Strike, Riot and Civil Commotion
 Maintenance Visits Vs Extended maintenance
 Expediting Expenses
 Airfreight expenses
 Offsite Storage
 Inland Transit
 Designer’s Risk
 Contracts works taken over or put into service
PRINCIPLE EXTENSIONS TO BASIC CAR
COVER
Section II:
 Cross Liability
 TPL cover during maintenance period
 Vibration, removal or weakening of support
PART 2