What is Construction All Risk Insurance?

Construction All Risks

Construction All Risks insurance  or Contractor All Risks insurance (CAR) is an insurance policy that would cover your company for its property damage and third-party liability in case of bodily injury or material damage claims.

In Hong Kong it can also include Employee Compensation for the dedicated project workers.

Damage to property can include improper construction of structures, damages that would occur during a renovation, as well as damage to temporary structure for an event.

CAR insurance coverage is commonly used for a wide kind of projects such as brick and mortar construction (building), water tanks, sewage treatment plans, flyovers, airport and temporary construction for events (concerts, exhibition etc…)

What is covered?

Section I for material damages can cover:

  • Coverage for the loss of or damage to the materials during the contract period.
  • Coverage for the cost of removal of debris
  • Automatic increase of the sum insured if the actual contract sum is in excess of the estimated contract

Section II to the Third party liability can cover:

  • Coverage of the public liabilities for the accidental death or bodily injury as well as accidental loss of physical damage linked to the construction contract.
  • Coverage of liabilities caused by an accidental loss on the insured property during the period of the contract
  • Coverage of your liability against any accidental death or body injury of employed visitors, while visiting the construction site.
  • Coverage of your liabilities in a specified defect liability period after completion of the contract.
  • Coverage of your liabilities for any loss of or damage to any property resulting from vibration or by the removal or weakening of support.

Section III can cover Employee Compensation on a specific project.

What should you know?

Construction All Risks is quite a simple insurance product combining for a dedicated projects Property All Risk, Public Liability and Employee Compensation.

However, here are some good tips to know before subscribing:

  • Premium is mainly based on Contract Value, then number of days, limit of liability and (if needed) total wages if Employee Compensation is needed
  • It often take longer than expected for an insurance to issue quotation on CAR. Think about it in advance!
  • The main insurer and policy holder should be the main contractor. Not necessary the company ordering the construction work.
  • When doing construction or decoration work in a mall, public place etc… it is often required to have as co-insured landlord, property management etc…
  • Same CAR insurance policy for an event can cover both set-up and dismantlement of the stage / decoration etc…
  • Always check Public Liability limit requested as well as sub-limit when engaging for work in a mall, museum, public places etc… those can have a huge impact on the premium of your CAR and at the end on your budget.


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