What is Contractors All Risk Insurance?

Contractors Risk Insurance is a type of insurance coverage designed to protect contractors and construction projects against a variety of risks.

This insurance is also known as “Contractors All Risk (CAR) Insurance” or “Contract Works Insurance.” It provides comprehensive coverage for the duration of a construction project, typically from the time construction begins until it is completed.

The policy typically covers damage or loss to the contract works, which includes the materials, construction equipment, and the property being constructed. It may also include coverage for third-party liabilities arising from the construction activities, such as bodily injury or property damage to third parties.

Key features of All Contractors Risk Insurance may include:

1. Material Damage Coverage: Protects against physical damage or loss to the construction project, including materials, machinery, and the structure itself.
   
2. Third-Party Liability: Covers legal liabilities for bodily injury or property damage to third parties arising from the construction activities.
   
3. Delay in Start-Up (DSU) or Advanced Loss of Profits (ALOP): Provides coverage for financial losses resulting from delays in the completion of the project, including additional expenses and lost profits.
   
4. Professional Fees: Covers fees for architects, surveyors, and engineers that may need to be re-engaged due to covered events.
   
5. Temporary Structures: Coverage for temporary structures erected on-site, such as scaffolding or temporary buildings.
   
6. Contractor’s Plant and Equipment: Protection for the contractor’s own plant and equipment used on the construction site.

It’s important for contractors to carefully review the policy terms, conditions, and exclusions to ensure that they have adequate coverage for the specific risks associated with their construction project. Contractors All Risk Insurance is typically tailored to the unique characteristics of each construction project, and the coverage can vary based on the policy and the insurance provider.

How Much Does Contractors All Risk Insurance Cost?

The cost of Contractors All Risk (CAR) Insurance can vary widely based on several factors related to the construction project and the contractor. Insurance premiums are influenced by things such as the size and duration of the project, the type of construction and the location (as well as many other things).

Contractors All Risk Insurance can cost from as little as £240 annually from some insurance providers, but this is the lowest estimated and most insurance quotes will be more depending on your project.

Who Needs Contractors All Risk Insurance?

Contractors All Risk (CAR) Insurance is relevant for businesses involved in construction and contracting activities. Various types of businesses within the construction industry can benefit from this type of insurance coverage.

In the UK, having Contractors All Risk (CAR) Insurance is not a legal requirement, but it is often highly recommended for businesses involved in construction projects. This type of insurance provides valuable protection against various risks associated with construction activities, helping to safeguard the financial interests of the contractor, the project owner, and other stakeholders.

While it may not be a legal requirement, the decision to purchase Contractors All Risk Insurance depends on various factors, including the nature and scale of the construction project, contractual obligations, and the risk tolerance of the parties involved. It’s advisable for contractors to carefully assess their specific needs and consult with insurance professionals to determine the appropriate level of coverage for their projects.

DISCLAIMER: Easy Home Improvement are not financial advisors or tax advisors and we encourage visitors to seek our professional advice on tax deductions with your property.