The Ultimate Guide to Contractors All Risks Insurance

Why You Need It and How to Get It.

When you’re knee-deep in a construction project, the last thing you want is to worry about unexpected damages. That’s where Contractors All Risks (CAR) insurance comes in—a policy that’s like a safety net for your construction works, whether a new build, repair, or refurbishment.

What Exactly is Contractors All Risks Insurance?

Contractors All Risks insurance is designed to protect your project from physical loss or damage. Whether you’re dealing with a new build, a repair job, or an upgrade, this policy covers your structures, equipment, and more. You might hear it called Contract Works Insurance or Erection All Risks Insurance—different names, same essential coverage.

Real-Life Example: Imagine you’re working on a high-rise building in London. Halfway through, a crane accidentally drops a heavy beam, causing significant damage to the lower floors. Without Contractors All Risks insurance, the repair costs would be crippling. But with it? The policy covers the damage, letting you focus on finishing the project on time.

Who Should Get Contractors All Risks Insurance?

If you’re in the contracting trade, Contractors All Risks insurance is a must. But it’s not just for contractors—anyone with a financial stake in a construction project should consider it. Whether it’s required by a contract or you’re just looking to protect your investment, Contractors All Risks insurance ensures you’re covered.

Real-Life Example: A property developer in Manchester was refurbishing an old warehouse into luxury apartments. Partway through, a fire broke out due to an electrical fault. The developer’s CAR insurance covered the fire damage, preventing financial disaster and keeping the project on track.

How Do You Get Contractors All Risks Insurance?

Most contractors opt for an annual Contractors All Risks insurance policy that covers all their projects throughout the year. You can get it as a standalone policy or as part of a broader package, like a Contractors Combined policy that includes Employers and Public Liability.

But if you’re working on a particularly large or complex project, you might want to look into a project-specific policy. This type of coverage is arranged by the project principal and ensures that everyone involved is protected under one comprehensive plan.

Real-Life Example: During the construction of a large shopping centre in Birmingham, the project was divided among several contractors. To ensure smooth coverage across the board, the project principal arranged a project-specific Contractors All Risks insurance policy. This avoided potential disputes and ensured that all contractors were adequately covered under one umbrella policy.

What Does Contractors All Risks Insurance Cover?

At its core, Contractors All Risks insurance offers “All Risks” coverage—meaning if there’s a loss or damage, it’s covered unless the policy specifically excludes it. Unlike other policies, the burden is on the insurer to prove an exclusion applies, not on you to establish the cause.

Real-Life Example: A scaffolding company in Edinburgh was setting up for a major renovation when a sudden storm caused significant damage to their equipment. Because they had a Contractors All Risks policy, the insurer couldn’t deny the claim by arguing it was an act of God. The scaffolding company received full compensation for their damaged equipment.

But What About Existing Structures?

Here’s an important point: Contractors All Risks insurance usually doesn’t cover existing structures. Those should be covered by the property owner’s insurance. In some cases, the contract might require the principal to insure the existing structure along with the contractor, but this is usually very specific and might only cover certain risks.

Real-Life Example: While renovating a historical building in Bath, the contractor’s CAR insurance didn’t cover the original structure itself—only the new works being done. Luckily, the property owner had separate insurance for the existing building, which covered a small incident where part of the original facade was accidentally damaged.

Need to Insure Your Plant Equipment?

Good news— Contractors All Risks insurance can often be extended to include loss or damage to your own or hired-in plant. Your own plant is covered on an All Risks basis, while hired-in plant is covered based on the legal liability outlined in your contract.

Real-Life Example: A contractor working on a bridge construction project in Newcastle had their hired-in excavator stolen overnight. Fortunately, their Contractors All Risks policy included coverage for hired-in plant, so the cost of the stolen equipment was fully reimbursed by the insurer, allowing the project to continue without major financial loss.

In a Nutshell

Contractors All Risks insurance is your go-to for protecting construction projects from the unexpected. Whether you’re working on a small repair job or a large-scale development, having the right insurance in place means you can focus on building, not worrying.