1. CONTRACTORS’ ALL RISKS INSURANCE Rohana Alagiyage
CAR
CONTRACTORS’ ALL RISKS INSURANCE
Rohana Alagiyage

2. Part I – Basic Policy Form
Part II – Standstill Insurance

3. CAR Vs EAR
EAR- Erection All Risk
Determining factor- Value of Erection & Installation works
Less than 50% - CAR
Above 50% - EAR

4. SUBJECT MATTER INSURED
CAR may be taken out for all building and civil engineering projects, such as:
Residential and office buildings, hospitals, schools, theatres
Production facilities
Infrastructure facilities, airports
Bridges, dams, tunnels and harbors (wet works)

5. INSURED PARTIES - Jointly
CAR insurance should be concluded for all parties concerned to avoid overlaps or gaps in cover:
The principal (employer) &/or
The main contractor &/or
Subcontractors &/or*
Project managers &/or
Suppliers, if any*.
* Un-named

6. SCOPE OF COVER – Two Sections
SECTION 1- Material Damage to:
Contract works (permanent and temporary works forming part of the contract)
Removable of debris
Professional Fees
Free issue materials
Construction Equipment ( Site offices, storage sheds, silos, scaffolding, utilities etc)
Construction machinery (earthmoving equipment, cranes, site vehicles)
Principal’s existing property
SECTION 2 - Third party liability:
Bodily injury & Property Damage

7. SECTION 1- Material Damage
Cover on ALL RISK basis against unforeseen and sudden physical loss or damage to the insured property from ANY cause other than those specifically excluded

8. SECTION 2 Accidental bodily injury to third parties
Where the Insured becomes legally liable to pay as damages consequent upon :
Accidental bodily injury to third parties
Accidental loss or damages to property owned by third party.
Occurring in direct connection with construction works insured under Section 1

9. SCOPE OF COVER - Cont
General Exclusions:
Political risks, war or warlike operations, SRCC
Nuclear, radioactive contamination
Willful act or willful negligence of the insured or their representatives
Cessation of work whether total or partial

10. SCOPE OF COVER - Cont Special Exclusions to section I:
Consequential loss of any kind
Faulty design
Defective material / workmanship (faulty part only)
Mechanical and/or electrical breakdown
Wear and tear, corrosion, gradual deterioration
Road vehicles, waterborne vessels and air crafts
Inventory losses

11. SCOPE OF COVER - Cont Special Exclusions to section II:
Property insured or insurable under Section I
Vibration, removal, weakening of support
Liability for bodily injury to employee/ workmen of insured parties
Liability for damage to property belonging to insured parties
Motor , Marine & Aviation liability
Contractual liability

12. PERIOD OF COVER Contractors’ All Risks Insurance Works cover
Maintenance period
Operational covers (Fire, Allied perils, TPL)
Inception date
Commencement of works

13. PERIOD OF COVER Cover ATTACHES from the commencement of work or
after the insured items have been unloaded at site or
the inception date as specified in the policy
Whichever is later
And TERMINATES when
the completed structure is taken over or
put into service or
the expiry date specified in the policy
Whichever is earlier

14. CALCULATION OF SUM INSURED
SI must be equal to the amount stated in the building contract plus a value of any free issue material
Contractually, insured contractor may be required (e.g. Under FIDIC contracts) to include 15% of CV towards costs of rectification, removal of debris and professional fees
Separate sums insured for:
Construction machinery and construction plant and equipment (equal to NRV)
Existing property and clearance of debris (Loss limits)
Third party liability – Section II (as per contact conditions)

15. PRINCIPLE EXTENSIONS TO BASIC CAR COVER
Section I:
Strike, Riot and Civil Commotion
Maintenance Visits Vs Extended maintenance
Expediting Expenses
Airfreight expenses
Offsite Storage
Inland Transit
Designer’s Risk
Contracts works taken over or put into service

16. PRINCIPLE EXTENSIONS TO BASIC CAR COVER
Section II:
Cross Liability
TPL cover during maintenance period
Vibration, removal or weakening of support

17. PART 2