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Contractors / Erection All Risk Insurance

Contract All Risks (CAR) and Erection All Risks (EAR) insurances provides cover for accidental physical loss or damage to the works under construction.

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Cover at a glance
  • All risks protection for Property damaged whilst undergoing construction
  • Third Party Liability for personal injury and property damage for which the insured becomes labile to pay
  • Covers the duration of the project through to practical completion including a defects period
  • Extensions of cover need to be carefully considered as they are numerous

Policy Overview

Contract All Risks (CAR) and Erection All Risks (EAR) insurances provides cover for accidental physical loss or damage to the works under construction (Section1) from damage such as fire, storm, lightening, malicious damage, impact, theft on site and/or stored remotely and includes limited cover whilst in transit. Both policies extend to third party liability (Section 2) for personal injury and/or property damage to unrelated parties and include the time limited maintenance period required to rectify defects, errors and emissions. CAR cover relates to building works whilst EAR covers the assembly of plant and machinery.

The policy is generally purchased by construction firms, builders and associated trades such as plumbers, electricians and engineering firms however can also be purchased on a principally controlled basis with the owner of the project insuring on behalf of the contractor and their associated trades. This is common with Owner Builders.

The policy can be extended to include cover such as:

  • Existing structure covering that portion of the improvement on the site which aren’t being worked upon, yet could be the subject of a loss;
  • Materials supplied by the owner / principal,
  • Off site storage of materials,
  • Transit,
  • Contractors tools and equipment including onsite unregistered mobile plant.
  • Delay in start up (DSU) and Advanced Loss of Profits (ALop) covering the financial loss associated with the delays at the commencement and completion of the project.

Major Exclusions:

  • Cessation of works and abandonment,
  • All cost incurred in gradual deterioration,
  • Atmospheric conditions such as rust, oxidisation, mildew and insects such as termites, moths and vermin,
  • Breakdown,
  • Inventory shortage,
  • Cash and securities,
  • Fines and Penalties,
  • Piling foundation and retaining walls unless specifically required,
  • Asbestos,
  • Computers and Electronic data.

The information provided on this page that may have been implied is General Advice only and does not take into consideration your specific needs, risk appetite or financial requirements. Please contact our office to discuss and review your needs and the appropriate financial product best suited to meet your requirements . Before purchasing any financial product, you should always read the Product Disclosure Statement to ensure the product is suitable for your needs.

Frequently Asked Questions

What should I insure?
The full contract value including any allowance for delays and escalation during the entire period of the works being undertaken taking into consideration delays due to bad weather and the length of defects period.
How is my premium calculated?
Coverage can be purchased on a single “one off” policy or on an “annual” contract basis , the former covering the specific project for the full value of the contract to be underwritten, taking into consideration the duration of the contract works period, the scope of works themselves and the location. An annual contract works policy is rated on “all” those projects which commenced during the 12 month policy period using the same considerations as detailed in the one off policy rating above. The third party liability is charged for separately using the same underwriting principals above. Additional premiums are charged independently for the sublimit extensions taken in property section of the policy.
Does my policy cover New for Old?
Yes, subject to the adequacy of the sum insured on the schedule.
Can I adjust my excess?
Yes. The excess is the amount you contribute towards the claim in the event of a loss. We can work with you to determine your risk appetite which influences the excess that you should be selecting. In some cases insurers will impose a minimum level of excess.
Tip - Contractual Liabilities
Understanding the various contractual arrangements between all parties and having your insurers “Note and Allow” those contracts where you have assumed liability on behalf of the contractor is critical. When contractually transferring liability to a third party, it is essential that you make certain the party concerned has the correct insurance protection in place to protect your interests.

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