Contractor All Risk (CAR)

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Contractor All Risk Insurance (CAR)

Our country is a Developing country and lot of construction happens like Roads, Bridges, Hospitals, Residential projects, Hydro electric projects. Such projects if halted due to any physical damage may lead to substantial setback to the principal and the contractors. Project insurance has an important part in civil construction and an all-risk insurance is given under the name of Contractors all risk insurance. The policy although named as contractor All Risk covers the interest of the principal as well as the contractor and sub contractors working under the contractors.

Coverage:

CAR policy is an all-risk insurance policy wherein everything is covered other than the exclusion mentioned in the policy schedule. Broadly the coverage can be divided in two parts.

Material Damage

  • Protection against construction materials, machinery, plant, equipment used in the construction, civil and other material work the project site.

  • Covers perils like Fire, lightning, burglary, theft, explosion, impact damage, collision, failure of cranes and Act of God perils such as Flood, storm, Earthquake etc.

  • Along with material damage coverage, it offers additional add-on coverage like additional custom duty, express freight, wages, and other related expenses, escalation, etc
Third Party:

  • Liability arising due to fatal and nonfatal injury to any third person other than insured’s own employees or other employees of the firms connected with any other construction work, or members of the insured family due to the construction activity.

  • liability arising due to damage of third-party property or property held in trust or under custody of the insured.
Wider add on coverage:

  • Wider addon cover like design defect, escalation, express freight, custom duty, removal of debris, extended maintenance, loss minimization expenses, cover for offsite storage and fabrication cover, professional fee extension etc.

  • Free add on such as 72-hour clause, waiver of subrogation /contribution,50-50 clause is also available.

  • Contractor Plant and Machinery can also be covered.

Major Exclusions

  • Loss or damage due to faulty design, defective material or bad workmanship

  • Cost of rectification or correction of any error during construction not resulting in physical loss

  • Cessation of work either full or partial

  • Damages to files, drawings, bills and accounts.

  • War and nuclear perils and consequential losses.

  • Willful act and negligence, loss discovered at the time of taking inventory, and normal wear and tear.

  • Penalties for non fulfilment of contractual obligations, operational deficiencies.

  • Cost of any alterations, additions or improvements after claim.

  • Contractual liabilities, and accidents caused by road, water and air borne vehicles.

  • Terrorism Damage coverage (Covers as add on cover)

Sum Insured

It should represent the estimated completed value of the project. It should include.

Basis of loss settlement

  • If the damage can be repaired, then cost of repair necessary to restore the item immediately before the loss will be paid. No depreciation will be deducted from the claim. If sum insured is less than the amount required to be insured (estimated completed erected value) claim will be subject to under insurance. Also, salvage will be adjusted in the claim.

  • If of total loss, insurance company will pay the actual value of the item immediately before the loss. Under insurance and salvage will be applicable as above