Engineering InsuranceContractors All Risk

Contractors All Risk

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Contractors All Risks (CAR)

Contractors All Risks insurance policy is specifically designed for builders and a variety of contractors working at a contract site. Contractors All Risks insurance can comprise cover for public liability, own plant, contract works, hired-in plant and employee's tools. The critical part of the contractors all risks insurance is the contract works section that offers cover for the value of the materials and property being used on a project.


The policy offers coverage under two sections:

  • Section I
    Material damage: The policy covers physical loss, damage or destruction of the property due to any cause other than those specifically excluded in the policy.
  • Section II
    Third-party liability: The policy covers the legal liability falling on the insured contractor as a result of bodily injury or property damage suffered by a third party.

Key Benefits

  • Material Damage: Under this loss, damage, or destruction of property incurred due to any cause other than those excluded in policy are covered. Most of the policies pay for the losses or damage up to a certain amount that does not exceed the sum mentioned against every item and does not exceed the total sum insured.
  • Third-Party Liability: Under this, the coverage towards:
    • Legal liability related to accidental damage or loss caused to the property of third-person
    • Legal liability for non-fatal and fatal injuries caused to third-person (other than the own employees or workers of the insured) due to the construction of the property
    • Perils that are covered under contractors all-risk policy are:
      • Fire and allied perils
      • Collapse
      • Earthquake, shock, and fire
      • Faults in construction
      • Storm, flood, cyclone, and tempest.
      • Negligence and human errors
      • Water damage

Add-On Covers

Cover can be extended up to a limit chosen by the insured on the following, on payment of additional premium:

  • Express freight, Holiday and Overtime
  • Airfreight
  • Breakage of glass
  • Additional customs duty
  • Cost of Clearance & Removal of debris
  • Earthquake
  • Escalation
  • Storage at Fabricator's Premises/ Workshop
  • construction equipment like scaffolding, shuttering materials
  • Contractor's plant & machinery
  • Cross liability
  • Third-party liability
  • Maintenance visits cover and Extended Maintenance cover to cover accidental loss or damage whilst carrying out any rectification during the maintenance period and/or any amount incurred for rectification of such original defects or faults during construction.
  • Owner's surrounding property or damage to surrounding property not forming part of the contract work.
  • Terrorism


The main exclusions under Section I for which no claim is payable, are loss or damage due to:

  • Faulty design
  • Rectification of aesthetic defects of structure not relating to any physical loss or damage to the structure due to an accident, or of material defector of workmanship defect
    The exclusion of defective material/workmanship is limited to the parts of the structure immediately affected. It does not apply to any consequential loss to correctly executed items, arising out of the accident due to defective material or workmanship
  • Loss or damage due to gradual deterioration, atmospheric condition, rusting etc
  • Loss discovered only at the time of taking inventory
  • Loss arising out of the penalty for delay, non-fulfilment of terms of the contract

Claim Process

In the event of loss, following are immediate actions to be taken
To intimate to the insurer the occurrence of loss, submit full statement in writing of the claim, provide the nature and extent of loss and also the estimate of loss. Any delay in intimation might jeopardize the claim as the insurer may express inability in accepting liability of the loss / damage.

  • To take all steps to reduce and minimize the extent of loss/damage and liability.
  • Proximate cause of the loss and assess the type/extent and whether it is within the scope of the policy
  • To extend full co-operation to the insurer and the surveyor appointed for completion of the survey work and proper assessment of the loss
  • Produce all such records and proof as may be required by the surveyor or the insurer for arriving at the extent of loss and the liability under policy.
  • Provide documents such as, claim form, Claim bill, copy of policy etc
  • Keep the damaged property under the safe custody until advised by the surveyor/insurer regarding its disposal
  • Identification of the subject matter insured

Why Choose PrishaPolicy

5 Reasons why you should choose us to be your policy issuing partner of choice. Allow us to tell you why we are one of the fastest growing insurance brokers.

Customer-Centric Culture

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A Decade of Market Leadership

Our teams expertise and experience makes them the perfect guides in choosing a policy that fits your needs.

Reliable and Consistent

Rest assured that everything will be taken care of without a glitch. From shortlisting to claims processing & delivering promises without a hitch.

Guided Policy Assistance

Our experts are forever ready to assist you through each policy detail with a fine-tooth comb.

Claims Assistance

Our DNA prompts - Sales is incomplete without timely support. From start to end, we facilitate smooth processing from lodging to settlement.

Still Thinking About It?

Get on a call with us. We take pride in being associated with you for competitively managing your risks with the best insurance covers and delivering a stress-free experience.

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Questions You Might Have

Should all the losses that are under the deductible be reported?

If the loss is below the deductible, it is not recommended to report it to the insurance provider. If one is not sure about the final amount of loss or deductible amount, it is recommended to contact the insurer.

What is the duration of Contractors All Risk Insurance policy?

Unlike other insurance policies, the Contractors All Risk Insurance plan is issued for the period of the contract that is from the starting of work until the work completes. Even though it is possible to extend the period of the policy if the completion of the contract gets delayed, but it is always wise to choose a slightly longer insurance period initially for avoiding paying a higher premium in case of extension.

For what value of machine the insurance should be purchased?

It is a requirement of this insurance that the sum insured be equal to the cost of replacement of the machines by new machines of the same kind and same capacity, which shall mean its replacement, or reinstatement cost, including freight, custom duties, if any, and erection costs.

Can we cover loss due to design defects in the engineering policy?

Yes, you can cover the costs of project damages caused by design flaws. Damage due to design is an exclusion in a normal policy, but by paying an additional premium, you can cover the design flaw in the policy. There are other forms of design defect cover, such as design defect-3 and design defect-4, that can be added to the policy as an add-on for an additional premium. We advise all of our clients to include this coverage in their erection all risk insurance.