What is contractors’ all risk insurance?

Also known as CAR insurance for short, contractors’ all risk insurance is a non-standard insurance policy that provides mass coverage for ongoing construction projects, which is especially useful for contractors, including builders, electricians, and plumbers. The two primary types of risks for these are property damage or theft and third-party damage or injury claims.

For example, should you find yourself in the unfortunate situation of a half-completed property being destroyed by a fire or flood that neither you nor the customer were responsible for, you’ll need contractors’ all risk insurance to pay for repairs. This way, you won’t be out of pocket for the cost of redoing the work, and your client won’t be unhappy about having to pay twice.

While standard insurance policies only cover ‘named perils’ – i.e. the specific situations outlined in the contract – construction insurance is more flexible. The ‘all risk’ part means that all liabilities are covered unless otherwise specified (almost the opposite of ‘named perils’ insurance). In addition to structural warranties, we provide this type of CAR insurance at Architects Certificate.

What does contractors’ all risk insurance cover?

A contractors’ all risk policy should cover all of your equipment, materials, and employees on the building site for the duration of your project. Of course, this includes the structure itself, whichever stage of progress it may have reached, and any temporary buildings such as portable office units.

It’s possible to get separate policies to cover different areas, such as contract works insurance for the construction and tools then public liability insurance for third-party damages, but it’s far more cost-effective to roll these into one policy. As a comprehensive package, CAR insurance can cover:

  • Contract works
  • Public liability
  • Employers’ liability
  • Own plant or hired-in plant
  • Privately owned tools or effects

You may also be able to extend this cover to include extras like legal expenses or non-negligence for damage to neighbouring properties. As a contractor or developer, if you expect to sell the property, then the buyer’s own insurance provider will require you to have the appropriate insurance yourself.

What’s excluded from contractors’ all risk insurance?

Being able to claim financial compensation for a variety of damages, losses, and injuries is extremely useful if something goes wrong. However, as with any policy, contractors all risk insurance can’t realistically cover every potential risk. This is why exclusions like these are specified in the contract:

  • Professional indemnity (negligent advice, design, or building works)
  • D&O (directors and officers whose managerial decisions have an undesirable outcome)
  • Defective workmanship (should be covered by a structural warranty instead)
  • Wear and tear (equipment failure should be covered by a manufacturer’s warranty)
  • Consequential losses (due to delays, penalty charges, poor performance, liquidation, etc)
  • International projects (usually only available in the provider’s country, not overseas)

The CAR policy should cover you against damages caused by external circumstances, such as theft, vandalism, fire, or third party injuries, for the agreed-upon duration of the works. It usually won’t cover the above instances, or force majeure situations such as natural disasters or sudden wars.

	contractors all risk insurance uk

How much does contractors’ all risk insurance cost?

Since contractors’ all risk insurance has a wider scope than other types of cover, the premiums may be higher than you might expect. However, we’re happy to explain how your circumstances affect the cost of CAR insurance, including the scale, value, location, and duration of your building project.

Please give Architects Certificate a call on 0161 928 8804, email info@architectscertificate.co.uk, or send a message via our online contact form to discuss your requirements for contractors’ all risk coverage and obtain a no-obligation quote. We’re sure our expert team can provide what you need.

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What is the difference between all risk contractors’ insurance and liability insurance?

Whilst contractors’ all risk insurance covers you for damages caused by things that are out of your control, the main purpose of general liability insurance is to cover your business against claims made by members of the public. This could be a claim for injury, property damage or illness caused by your business’ work.

For example, if a member of the public was to be hit by rubble falling from your building site, general liability insurance would cover you against this.

And whilst your general liability insurance would cover damage to a hardwood floor that was caused by an employee dropping some equipment, your contractors’ all risk policy would cover damage to the floor caused by a trespasser. 

In short, general liability insurance protects you only against claims made against your business. On the other hand, all risk cover protects you against claims made against your business, damage to the structure itself, and loss, theft or damage of your equipment and building materials.

Are temporary site structures covered by contractors’ all risk insurance?

If you would like contractor’s all risk insurance cover for any temporary site structures, such as huts or storage areas, you should inform us of this when you take out the insurance cover. The temporary site structures and their contents will be covered by your insurance policy, as long as you tell us about them when you purchase the cover.

If you’ve already taken out a contractors’ all risk insurance policy with us and you’ve decided that temporary site structures are needed after the event, just give us a call and we can update your policy.

To discuss exactly what would be covered with a contractors’ all risk insurance policy with a knowledgeable member of our team, give us a call on 0161 928 8804 or send us a message and we will get back to you shortly.

Are legal expenses covered by all risk contractors’ insurance?

Yes, legal costs for liability claims made against your business are included as a standard option in our contractors’ all risk insurance cover.

 In the event of a claim, your contractor’s all risk policy will offer you access to sound legal advice in a range of circumstances. You will be able to obtain expert legal guidance relating to your property, employment, any contract disputes, and a variety of other legal issues.

How is the cost of contractors all risk building insurance calculated?

How we calculate the cost of your contractors’ all-risk insurance policy will depend on a number of factors. These include the scope, location, value and duration of your project. Here are some of the factors that will influence the cost of your policy: 

  • The nature and size of your project. This will indicate the level of risk that is posed, as large-scale construction projects typically carry an increased amount of risk.
  • The distribution of turnover and wages between various construction activities and the perceived risk that is attached to each of these can impact your insurance premium.
  • Working at height (more than 6 meters above floor level).
  • Making excavations.
  • Working with heat.
  • Using industrial machinery.
  • Having made several large claims previously with a lack of remedial action. This indicates that risks are not being properly managed and will inevitably affect your insurance cost significantly.

Is contractors’ all risk insurance a legal requirement?

Other than employers’ liability insurance, it’s not actually mandatory by law to have contractors’ insurance. However, just because it isn’t a legal requirement doesn’t mean it’s not necessary to have this kind of safety net in place for your construction projects.

As you’re aware, there are plenty of risks that come with this line of work, and the last thing anyone wants is to foot the bill for costly repairs and replacements in the event of damage or theft. Why wouldn’t you want the peace of mind of financial protection?

Not only does having contractors’ all risk insurance protect you, but it’s also likely to get you more business. Clients may be unwilling to work with you if you don’t have the security of a CAR policy, even if it’s not technically a contractual obligation.

Many parties that you’ll be working with are likely to request proof of your insurance status before agreeing to a contract, so it’s best to be prepared for all eventualities. This level of professionalism can also help to boost your reputation as a reliable contractor. 

Is contractors’ all risk insurance an annual policy?

The payment terms for your contractors’ all risk insurance policy will depend on your individual contract. There are different types available according to the coverage you need, whether that’s an annual policy or a separate policy for a specific project.

You can purchase annual contractors’ all risk insurance on a yearly basis to cover all work that you undertake during that year, with a maximum value per project. This is usually the easiest solution for contractors who work on multiple projects every year.

Alternatively, project-specific contractors’ all risk insurance might be the better option for a larger-scale venture, especially if it involves multiple parties that need to be named on a joint policy. The only issue is that these tend to have a limited timeframe.

In some cases, it may be possible to extend your coverage if the project overruns past its original deadline. Whichever approach you take, you must always set up contractors’ all risk insurance before any work commences, to avoid issues with claims.

Can I customise my contractors’ all risk insurance?

As explained above, there are generally several elements of construction works that this type of insurance covers. That said, these aren’t always included as standard, so you may have to request some amendments before you’re happy with the extent of your CAR policy.

If the contract you’re offered doesn’t include the following, and you believe you may need them, you might want to ask your insurer to add any of these things to your suggested cover:

  • Temporary buildings
  • Onsite storage
  • Engineer fees
  • Restoration of plans/drawings
  • Demolition/removal of debris
  • Overtime work/holidays
  • Surrounding property
  • Equipment during transit
  • Commercial legal expenses

These extras aren’t guaranteed, as it depends on your provider’s risk assessment, and usually means extending claim limits. Additional cover also means additional costs, resulting in higher premiums.

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