CONSTRUCTION ALL RISK INSURANCE
What is Construction All Risk Insurance?
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 dedicated project workers.
Property damage can include improper construction of structures, damages that would occur during a renovation, and damage to temporary structure for an event.
Businesses commonly use CAR insurance coverage for comprehensive projects such as brick and mortar construction (building), water tanks, sewage treatment plans, flyovers, airport and temporary construction for events (concerts, exhibitions 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 and 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 bodily 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 Property All Risk, Public Liability, and Employee Compensation for dedicated projects.
However, here are some good tips to know before subscribing:
- Premium is mainly based on Contract Value, the number of days, limit of liability and (if needed) total wages if Employee Compensation is needed
- It often takes longer than expected for insurance to issue a quotation on CAR. Think about it in advance!
- The main insurer and policyholder should be the main contractor. Not necessary for the company to order the construction work.
- When doing construction or decoration work in a mall, public place etc… it is often required to have a co-insured landlord, property management etc…
- The same CAR insurance policy for an event can cover both set-up and dismantlement of the stage/decoration etc…
- Always check the Public Liability limit requested and 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, in the end, on your budget.
Construction All Risks (CAR) vs Erection All Risks (EAR)
Construction All Risks (CAR) and Erection All Risks (EAR) policies provide important protection for inherently hazardous construction work. Although CAR and EAR insurance policies are often considered to be interchangeable, there are significant distinctions between them. In this article, we will discuss the particulars of the CAR and EAR insurance coverages and then explain their notable differences. Construction All Risks (CAR) Construction work is complex and risky and naturally exposes management to so many risks that can unexpectedly force expensive project delays and costly liabilities, potentially cutting down on profits. As a manager, whether [...]
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