A fire, flood, theft or accidental damage on a construction site can create much more than a repair bill.
It can delay handover, increase labour and replacement costs, damage plant and put pressure on cash flow.
For UK building contractors, the key question is therefore not simply whether you have
Contractors All Risks insurance.
It is:
Does your current insurance programme reflect the financial exposure your business could face if something goes wrong?
What does Contractors All Risks insurance cover?
Contractors All Risks insurance, often referred to as CAR insurance, is designed to provide protection against specified accidental physical loss or damage during construction projects, subject to the individual policy’s terms, conditions, limits and exclusions.
Depending on the insurer and wording, cover may include:
- contract works;
- materials;
- owned or hired-in plant;
- temporary buildings;
- off-site storage; and
- materials in transit.
Not every policy provides the same protection.
Rather than asking:
“Do we have Contractors All Risks insurance?”
ask:
“What is covered, to what limit, and under what conditions?”
What should contractors compare?
When carrying out a contractors’ insurance comparison, some of the most important areas to review are:
Area | Key question |
Contract works limit | Does the limit reflect the value of the projects we currently undertake? |
Owned and hired-in plant | Would the policy reflect the financial impact of theft or damage? |
Off-site storage and transit | Are materials covered before they reach the site? |
Existing structures | Who is responsible for insuring the existing building during refurbishment or extension work? |
Post-completion exposure | Does any cover remain during a maintenance or defects period? |
Excesses | How much would the business need to fund itself following a covered loss? |
Conditions and exclusions | Could security, theft, hot-work or site conditions restrict cover? |
Look beyond the headline premium
Two Contractors All Risks policies can show similar limits while providing different protection.
The differences may be found in:
- exclusions;
- excesses;
- sub-limits;
- security requirements;
- plant conditions; or
- policy definitions.
A lower premium does not necessarily mean the policy is more suitable.
A better question is:
How would we expect the policy to respond to one of our most significant credible losses and what costs might remain with the business?
Contractors All Risks is only part of the insurance programme
CAR insurance should not automatically be treated as protection for every construction risk.
Depending on the contractor’s activities, the wider construction insurance programme may also include:
Employers’ Liability – generally required for UK employers, subject to statutory exemptions.
Public Liability – for qualifying third-party injury or property-damage claims.
Professional Indemnity – potentially relevant where design, specification or professional responsibilities are undertaken.
Plant and machinery insurance – where significant equipment is owned or hired.
JCT 6.5.1 / non-negligent liability cover – where required under the relevant building contract.
The important point is understanding how each policy fits together and whether there are gaps between them.
Does your insurance still match your contracts?
Construction businesses change.
Project values increase, different contracts are accepted and new types of work are undertaken.
Insurance programmes can sometimes remain unchanged while the underlying exposure develops.
That makes this question worth asking:
If one of our largest credible site losses happened today, have we reviewed whether the current insurance programme still reflects the business we are now running?
What is the best Contractors All Risks insurance?
There is no single Contractors All Risks policy that is suitable for every UK building contractor.
The right arrangement will depend on the business’s projects, contracts, plant, activities and financial exposures.
When comparing options, consider:
- the cover provided;
- policy limits;
- excesses;
- exclusions and conditions;
- contractual requirements;
- claims support; and
- insurer appetite for the work being undertaken.
Price is important, but it should be considered alongside the quality and suitability of the cover.
How Sustain Insurance Brokers can help
Sustain Insurance Brokers can independently review a contractor’s existing insurance arrangements and consider how the programme aligns with its current projects, contracts and exposures.
Sustain has access to more than 200 insurers across the commercial insurance market, allowing us to assess a broad range of available options based on individual requirements.
We can review areas including:
- Contractors All Risks;
- Contract Works;
- plant;
- Employers’ Liability;
- Public Liability; and
- Professional Indemnity.
We also provide claims advocacy, supporting clients when insured losses arise.
The first stage does not require a contractor to change broker or immediately take its insurance programme to market. Our practitioners can review the existing arrangements, identify areas that may warrant further consideration and discuss the findings with the business.
Understand the exposure, understand the policy and assess whether the two still align.
Important information
This article is provided for general information only and does not constitute individual insurance advice or a recommendation to purchase a particular insurance product.
The availability and suitability of cover will depend on the circumstances of the individual business and the relevant policy’s terms, conditions, limits, exclusions and excesses.
Sustain Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 1045807).
