What is Contractor All Risk Insurance (C.A.R.)?
Contractor All Risk (CAR) Insurance, also known as Construction All Risk Insurance, is a type of insurance policy designed to provide coverage for construction projects. It offers comprehensive protection for contractors and project owners against a wide range of risks that can occur during the construction process. CAR Insurance is typically a customizable policy that can be tailored to suit the specific needs of a construction project.
Key features of Contractor All Risk Insurance include:
Coverage for Property Damage: Protects against damage or loss to the construction project itself, including buildings, materials, and equipment. This coverage extends to damage caused by perils such as fire, flood, theft, vandalism, and other unforeseen events.
Third-Party Liability: Provides coverage for bodily injury or property damage to third parties arising from the construction activities. This includes legal liabilities for which the contractor or project owner may be held responsible.
Delay in Completion: Offers coverage for financial losses resulting from delays in the completion of the construction project due to covered events. This can include additional construction costs, loss of income, and other related expenses.
Materials in Transit: Extends coverage to materials and equipment while in transit to the construction site, protecting against damage or loss during transportation.
Own Plant and Equipment: Covers the contractor’s own plant, machinery, and equipment used in the construction process against accidental damage.
Professional Fees: May include coverage for professional fees, such as architect or engineer fees, incurred due to the need to redesign or reconstruct parts of the project following covered damage.
Maintenance Period: Some policies may include coverage for defects or damage that become apparent during a specified maintenance period after the completion of the project.
Contractor All Risk Insurance is crucial for construction projects of varying sizes and complexity. It provides a safety net for unexpected events that could lead to financial losses, helping contractors and project owners mitigate risks and ensure the successful completion of the project. As with any insurance, it’s important to carefully review the policy terms, customize coverage based on project specifics, and work with experienced insurance professionals to address the unique risks associated with construction activities.
Is Contractor All Risk (C.A.R.) Insurance the same as Erection All Risk (EAR) Insurance?
Erection All Risk (EAR) Insurance and Contractor All Risk (CAR) Insurance are closely related and share similarities, but they are not exactly the same. Both types of insurance provide coverage for construction projects, particularly during the construction and installation phases, but they have some nuanced differences.
Here’s a breakdown of the key distinctions:
Scope of Coverage:
Contractor All Risk (CAR) Insurance: This type of insurance typically provides coverage for a broader range of construction-related risks, including material damage to the construction project, third-party liability, and delay in completion.
Erection All Risk (EAR) Insurance: EAR Insurance is a subset of CAR Insurance that specifically focuses on risks associated with the erection, installation, and commissioning of machinery, plants, or significant structures. It is more specialized and tailored to projects involving the assembly and installation of specific equipment.
Contractor All Risk (CAR) Insurance: Suitable for a wide range of construction projects, including buildings, infrastructure, and other structures.
Erection All Risk (EAR) Insurance: Tailored for projects where the primary focus is on the erection or installation of machinery, industrial plants, or specialized equipment.
Contractor All Risk (CAR) Insurance: Typically covers material damage to the entire construction project, including buildings and structures, along with third-party liability and delay in completion.
Erection All Risk (EAR) Insurance: More focused on providing coverage for the specific risks associated with the erection process, such as damage to machinery during installation, transit coverage for equipment, and coverage during the testing and commissioning phases.
In many cases, the terms “Contractor All Risk” and “Erection All Risk” are used interchangeably, and the specific coverage provided can vary between insurance providers. It’s essential for contractors and project owners to carefully review policy terms and customize coverage based on the unique aspects of their construction projects. Consulting with experienced insurance professionals can help ensure that the chosen insurance policy adequately addresses the specific risks associated with the nature of the project.
At Thailand Insurance Service, we will ensure your construction insurance policy properly meets the project needs and the owner’s objective to protect their heavy investment. CAR insurance policies are not the same for every contract works. Each job is unique. Call us now and we’ll review your CAR insurance policy conditions free of charge and explain how it should be properly arranged to give the coverage being paid for.