Understanding Contractorsí All Risk Insurance and why it is Important

Posted by insurancebrokersae on February 14th, 2020

Contractors’ all risk insurance (CAR) is a non-standard insurance policy that covers third-party liability claims on construction project sites. It includes third-party injury or damage claims and the risks that a contractor faces on the construction site during the everyday job. At a construction site, accidents are very common because of multiple reasons such as poor or improper construction, poor material used, and the damage because of some mishaps. The engineers and contractors on a construction site work in a highly volatile and risky environment. That’s why the contractors’ all risk insurance provides complete insurance from any kind of injury and damage during work hours.

The contractors’ all risk policy covers claim for both material/physical damage and accidental injuries to engineers, contractors, and others for ongoing work on a construction site. It protects against the cost of loss and damage. It is a complete insurance package for the people and properties at the construction site or nearby. The third-party injury claims include loss or injury to any person at the construction site involved or not involved in the construction works such as engineers, contractors, transporters, subcontractors and other visitors to the site. A material or physical damage includes property or structural damage at the construction site, vehicles, and neighbor buildings that might get damaged during the construction.

The CAR insurance policy can be taken by both the employer and the contractor. Usually, the contractor, employer, and some other parties such as financiers jointly take the contractors’ all risk insurance policy. The CAR insurance coverage is designed for construction projects including buildings, flyovers, airports, bridges or some other kind of construction work that involves a high volatile risk environment for work. As it is jointly taken by multiple parties, a claim against an insurer can be filed by any party. 

Why contractors’ all risk insurance is important?

  • A CAR insurance policy ensures all parties at a construction site are covered regardless of the type of damage or injury and who caused it.
  • If someone gets injured at the construction site, this policy covers claims for their treatment and physical damage.
  • It also covers claims for property damage for vehicles in the surrounding and neighbor building that might get damaged due to the construction work.
  • The amount for damage or injury claims is paid to a party by the insurer and it cannot seek to recover those funds from another party in the contract.

Kinds of risks covered under a CAR insurance policy:

Under the Contractors’ all risk insurance policy, the risks that cause damage or loss include flood, wind, earthquakes, water damage, fire damage and mold, construction faults and negligence at the construction site.

While you are an employer or a contractor it is always a wise idea to take out the CAR insurance policy to create a safeguard against any loss or damage. It helps them to file claims for any personal loss or property damage and make sure to prevent any additional financial loss.


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Joined: October 4th, 2019
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