What Is Contractors All Risk Insurance?

Contractors All Risk (CAR) Insurance is a specialist policy designed for the construction industry. It protects building projects, materials, and liabilities from risks such as accidental damage, theft, and third-party claims. This insurance is commonly used by contractors, developers, and builders to safeguard against financial losses during construction.

This guide explains who needs Contractors All Risk Insurance, how it differs from other policies, and what it covers.

Who Needs Contractors All Risk Insurance?

This policy is suitable for:

• Construction companies and building contractors.

• Self-employed tradespeople, including electricians, plumbers, and carpenters.

• Property developers managing building projects.

• Subcontractors working under larger firms.

• Businesses undertaking renovation or refurbishment projects.

If a project involves physical construction work, CAR insurance provides essential protection against unexpected risks.

What Does Contractors All Risk Insurance Cover?

CAR insurance typically includes:

1. Contract Works Cover

Protects the ongoing construction project against risks such as:

• Fire, flood, and storm damage.

• Theft or vandalism of materials and equipment.

• Accidental damage to the structure under construction.

2. Tools, Equipment & Materials

Covers contractors’ tools, machinery, and materials on-site against damage or theft. Some policies may extend cover to items stored off-site.

3. Public Liability Insurance

Provides financial protection if a third party (e.g., a member of the public) is injured or their property is damaged due to construction work.

4. Employers’ Liability Insurance

Covers workplace injuries and illnesses affecting employees or subcontractors. This is a legal requirement if a contractor employs staff.

5. Hired-In Plant Insurance

Covers rented machinery and equipment against damage or theft, ensuring contractors are not liable for replacement costs.

Is Contractors All Risk Insurance the Same as Public Liability Insurance?

CAR insurance is broader than Public Liability Insurance. While Public Liability covers injuries or property damage to third parties, CAR insurance also protects the construction project itself.

For example, if a storm damages a partially built house, CAR insurance would cover the rebuilding costs, whereas Public Liability Insurance would not.

Is Contractors All Risk the Same as Professional Indemnity Insurance?

Professional Indemnity Insurance protects against errors, negligence, or design mistakes, whereas CAR insurance covers physical damage and liability risks during construction.

A construction consultant or architect may need Professional Indemnity Insurance, while a builder would benefit more from CAR Insurance.

Who Takes Out Contractors All Risk Insurance?

The policy can be arranged by:

• The main contractor, to cover the entire project.

• Subcontractors, to cover their specific work.

• Project owners or developers, to ensure the project is fully insured.

Policies can be tailored depending on whether one company or multiple parties need coverage.

Is Contractors All Risk the Same as Contract Works Insurance?

CAR Insurance and Contract Works Insurance are often used interchangeably. However, Contract Works Insurance mainly covers the physical project, whereas CAR Insurance also includes liability cover and plant insurance.

For smaller projects, Contract Works Insurance alone may be sufficient, but larger developments often require full CAR Insurance.

Is All Risk Insurance the Same as Property Insurance?

No, Property Insurance covers existing buildings, while CAR Insurance covers buildings under construction.

A completed office building would require Commercial Property Insurance, but a partially built structure would need CAR Insurance until the work is finished.

What Do CAR Policies Look Like?

CAR policies are usually tailored to specific projects, but common features include:

• A policy schedule outlining cover limits.

• Named insured parties, including contractors and subcontractors.

• A list of covered risks, such as fire, theft, and accidental damage.

• Exclusions, such as poor workmanship or design flaws.

Policies vary, so contractors should compare different providers to find the best coverage for their needs.

Final Thoughts

Contractors All Risk Insurance provides comprehensive protection for construction projects, covering contract works, tools, public liability, and hired equipment. While not legally required, it is highly recommended for contractors, builders, and property developers to safeguard against unexpected losses.

For businesses undertaking construction work, CAR insurance is a valuable investment to ensure financial security against damage, theft, and liability claims. Comparing different insurance providers and tailoring a policy to specific project risks can help get the right level of cover.