Contractors’ All Risk Insurance

Contactor's All Risk Insurance is a specially designed policy to protect the interest of the contractors and principal as well as the sub-contractor, Lender (Bank/Financial Institution) in respect of Civil Engineering projects like the construction of a building, road, bridge, dam, canal, tunnels, water supply, irrigation etc. This is an all-risk policy covering every risk that is not especially excluded.

Contractors’ All Risk Normally Include:

1. Fire & Lightning and chemical explosion.

2. Physical explosions.

3. Accidental damage during construction, e.g.. Due to dropping, falling, lack of skill, negligence, malicious act, or human error.

4. Water damage, Flood, Storm, Tempest, Inundation, Earthquake.

5. Collapse, Collision, Impact.

6. Subsidence, landslide, rockslide.

7. Burglary

Exclusion

Under this policy, the Company will not indemnify the Insured in respect of loss, damage, or liability directly or indirectly caused by or arising out of or aggravated by -

1. War or warlike operations, civil commotion, etc. 

2. Willful act or willful negligence of the Insured or his representation.   

3. Nuclear reaction, nuclear radiation, or radioactive contamination. 

4. Loss discovered only at the time of taking an inventory. 

5. Normal wear and tear, gradual deterioration due to atmospheric conditions or lack of use, rust. Loss or damage due to faulty design. 

6. Loss due to cessation of work, whether total or partial. 

7. Loss to files, drawings, accounts, bills, currency, stamps, deeds, securities, cheques, or packing materials. 

8. Consequential loss of any kind or description whatsoever, including penalties, losses due to delay, lack of performance, and loss of contract.

9. Loss for damage to vehicles licensed for general road use or waterborne vessels or aircraft.

10. Loss or damage to construction plant, equipment and construction machinery due to electrical or mechanical breakdown, failure, breakage or derangement, freezing of coolant or other fluid, defective lubrication or lack of oil or coolant, but if as a consequence of such breakdown or derangement an accident occurs causing external damage, such consequential damage shall be identifiable.

Excess

In CAR, there are TWO TYPES of "excess" 

1. Normal Excess applies to normal kinds of losses, such as those caused by fire, accidental damage, etc.

2. Collapse/AOG Excess applies to losses caused by Collapse, Acts of God, such as Earthquake, Cyclone, etc.

Sum Insured

The sum insured should be the full value of contract works at the completion of construction, inclusive of all materials, wages, freight, duties and taxes, construction costs, and material/items supplied by the principal, etc. This policy consists of two sections:

Section I – Material Damage

Project cost [construction cost].

Increment in Project cost.

Construction Plant & Equipment.

Clearance & Removal of Debris.

Surrounding property.

Other [Specify].

Section II – Third-Party Liability

Personal Injury - Any one person.

Personal Injury – Any one Event/Period.

Property Damage – Any one Event/Period.

 Issued Date: 2004-11-17