What is Contractors All Risk insurance?

The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.

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Contractors All Risk (CAR) insurance is designed to cover work in progress on a construction site. Contractor All Risk is a type of construction insurance designed to cover a wide variety of the common risks you might encounter on a building site, but also fill in exclusions that might be left uncovered if you opted to insure your site with multiple different policies.

This article will explain what is and isn’t covered by Contractors All Risk. Have a look at our examples to see how it works practically

Contractors All Risk insurance explained

Contractors All Risk insurance is designed to cover most of the common risks you might face on a construction or building site

As its name would imply, a Contractors All Risk policy is designed to mitigate many of the things that can go wrong while you’re working on a construction site. From damaged equipment to blueprint errors, a good CAR policy will help keep you covered against most eventualities. While each policy is different, and typically built to the requirements of the buyer, here are some of the things you might expect to see in a good CAR (for more detail, see our full definitions below):

Common Types of Insurance Included in a Contractors All Risks
Public Liability: Cover if a third party (other businesses on site, general public) incurs damages or bodily injury.
Employers’ Liability: Legally required if you’re going to be hiring anybody (full-time, part-time, sub-contractors etc.). Cover if they’re injured/become unwell while working for you.
Contract Works: Cover for both the main subject matter of the contract (house, offices, factory etc.) and any unfixed materials on-site (windows, pipes etc. awaiting installation). But for works on only a portion of a building, only that area is covered. For example, if a loft renovation is being carried out on a residential property, contract works would cover the loft in case of a covered event like a fire but it wouldn't cover the rest of the house. That would be the responsibility of the homeowner's building insurance.
Plant and Machinery: Can cover both own and hired-in plant. Insurance for theft, loss, damage (fire, flood etc.) of plant while on-site. May also cover Temporary Buildings (huts, portable toilets).
Business Interruption: Covers financial loss for the cost of delays if you’re unable to continue working (high winds, flooding) due to circumstances out of your control.
Non-negligence: Protects against claims for damages to nearby property due to your construction work which isn’t the result of negligence (such as vibrations, weakening of support or lowering of groundwater)
Tools: Insurance for your handheld tools (welding guns, drills) if they’re lost, stolen or damaged accidentally

Keep in mind that CAR is a form of specialist insurance—each insurer may offer you a different combination of the coverages listed above as standard, so shop around and find a policy that covers everything you need.

Contractors All Risk Examples

  • Public Liability: While carrying tools into a building site, you bump into someone else’s fence and damage it. They sue you for the cost of repairs.
  • Employers’ Liability: An employee cuts themselves while using a saw and believes inadequate safety equipment is at fault. They’re out of work for 2 weeks due to the injury, and sue you to cover their lost wages.
  • Contract Works: As you begin work on a new house, there’s a fire next door which causes damage to the work you’ve already completed. Your Contract Works covers the cost of repairing the building works to the level it was at before the fire.
  • Plant and Machinery: A couple of cement mixers you own are waterlogged during a minor flood and broken. Your Plant insurance covers the cost of equivalent replacements.
  • Business Interruption: A storm means you can’t get on-site for a week. Your Business Interruption insurance covers your lost profits from the additional time you need to complete the project
  • Tools: Your toolbox is stolen from a secure building site overnight. You’re covered for the cost of replacing the equipment inside.

Do I Need Contractors All Risk insurance?

Any business with responsibility for a construction site while working on it should consider a Contractors All Risk policy.

If you’re working on high value, complicated contracts then a Contractors All Risk policy can protect you from most eventualities, so is absolutely worth considering.

It may be less valuable to businesses typically working on smaller projects, where you might find that your existing insurances keep you sufficiently covered.

For large-scale projects, you may be required to agree to take out a policy jointly with the business employing you before beginning work (other involved parties, such as investors or financing companies may also be named). This allows both your business and theirs to make a claim if they incur damages.

Insurers who offer this policy also forgo their right to subrogation, meaning that they can’t seek to recover any losses from other parties in the contract, so doing this can be a very effective way to protect everyone involved, and is extremely popular with construction investors.

What Does Contractors All Risk Insurance Cover?

Contractors All Risk insurance provides cover for property damages and any injuries or damages incurred by third parties and employees. Each policy is different, so it’s important you’re clear on what you are and aren’t covered for. Different insurers will offer different protections as standard/optional, so make sure you know what you do/don’t want to be covered for before signing up to a policy.

Policies vary, but many of the policy wordings we read offered protection for both the duration of the construction project and the initial 12 month maintenance period following completion.

Contract Works

Contract Works insurance protects any work in progress on a construction site if it is damaged (due to circumstances out of your control) before work is completed and the property is handed over to the owner. It’ll cover any financial loss incurred due to damages to property or materials, but doesn’t cover damage to any structures that existed before construction work began.

Public Liability

Public Liability Insurance will cover you in the event that a third party (i.e. anyone on site other than your employees such as customers, suppliers or the general public) incurs damages or injury as a result of your work.

Employers’ Liability

Employers' Liability Insurance insures you against claims from your own employees, in the event that they become unwell or are injured as a result of their work for you. It’s a legal requirement in the UK, so make sure you’ve got a policy before bringing anyone else on board, and keep in mind you may need to update your insurance if you bring on more staff than the insurer initially anticipated.

Plant

Plant cover will insure your equipment on-site against damages if something happens that’s out of your control. It can cover plant you own, have hired in, or both, if your business uses a combination of the two. It’ll typically pay out a maximum per item (often around £25,000, per policy wordings) so if you have any especially expensive equipment you may need a specialist policy for it.

Tools

Tools and Equipment insurance covers any tools that belong to a business or its employees, allowing your full-time staff to bring their tools to work and know they’re covered. It generally doesn’t cover sub-contractors, so check with your insurer if you use a lot of them and expect them to bring their own tools.

Non-negligence

Insures accidental (not as a result of your negligence) damage to nearby properties. This could be due to collapse, subsidence, lowering of groundwater etc. that has happened as a result of your work but was unpredictable. This policy is the most effective way of contractors all risk covering the existing building around your site.

Legal Expense

Your policy may also offer legal expense/advice. If a claim needs to be made, your CAR cover will give you access to specialist legal advice.

Defective design or workmanship is unlikely to be covered by a Contractors All Risk policy. While some may argue it falls within Contract Works, most insurers will specify defective design or workmanship as an exclusion to their policy—for example, Allianz specifically excludes defective design in its policy wording on page 7.

Yes—most CAR policies will include Plant cover while it’s on-site. Make sure to check with your provider before signing up, as some will include it automatically and some may offer it as an optional extra. It can include anything from vehicles (excavators, loaders) right the way through to portable buildings and scaffolding, so can give you complete protection against issues like theft, fire or flooding.

What do I need to complete a Contractors All Risk proposal form?

The requirements for a CAR proposal change depending on the policy you take out, but here’s a list of some of the things you’ll want to have ready to complete the proposal form.

  • Business Details
    • Contact details, date business established, business address
  • Number of employees and average salaries per year
  • Contract details
    • Site location, dates of contract
  • Turnover
    • Last 3 years, estimated for upcoming year
  • Details of the types of contract undertaken during the past 3 years
    • Value and type
    • Largest contract undertaken in past 3 years
    • Types of contract to be undertaken in the next 12 months
    • Maximum/average length of contracts
  • Valuation of tools, equipment, temporary buildings etc.
  • Companies House details (if Employers’ Liability is required)

If you’d like to have a look at an example form, here’s one from NIG.

How much does Contractors All Risk insurance cost?

Quotes for builders/groundworkers start from around £468 per year from getindemnity, but keep in mind that your costs may vary dramatically depending on the size of your business—naturally, larger projects are likely to cost a lot more to insure.

How can I save money on my Contractors All Risk insurance?

Like any insurance policy, there are a number of ways you can reduce your cost. Here are some examples of things you might want to consider if your insurers contractor all risk calculation is looking expensive.

  • Smaller Contract Value: smaller contracts carry less risk, both for you and anybody insuring you
  • Avoiding dangerous work: locations such as airports, power stations or offshore structures carry a higher level of risk (and more cost if something does go wrong)
  • Working at reasonable heights: going above 4M or below 1M creates new hazards that insurers will increase your cost to cover
  • Lower coverage levels: while you should always make sure your fully covered, opting for lower levels can reduce cost
  • No prior claims/convictions: having previously claimed on a policy or been convicted of a crime can indicate poor risk management on site. Your insurer will increase your cost appropriately.

While this isn’t an exhaustive list, it should give you an idea of ways you might be able to save money. However, it’s important to remember that CAR policies aren’t always designed to be the absolute cheapest policy possible, but more to make sure you’re covered for anything that could go wrong during a day of work.

Common Exclusions

While every policy is different, there are some things you can expect to see from most insurers. If a claim you make meets one of these criteria, then your insurer may be within their rights to refuse you compensation.

  • Avoidable damages: If you can’t prove you took necessary precaution to avoid damages that resulted in a claim
  • Equipment wear and tear: Your plant, tools and equipment are unlikely to be covered for wear and tear, cosmetic damage or anything caused by an electrical or mechanical failure
  • Ahead of schedule: If you incur costs or damages as a result of trying to complete the contract ahead of schedule then your insurer is unlikely to cover you
  • International/EU: UK All Risk policies won’t cover you for work overseas, so make sure to tell your insurer you intend to take on work internationally so they can adjust your costs.
  • Redesigns: Your business interruption insurance won’t cover any lost profits due to redesigns, changes or necessary improvements

If you ever have any questions about what you are and aren’t covered for, speak with your insurer to make sure there’s no blurred lines.

Where can I get a Contractors All Risk insurance quote?

Not every insurer will be able to offer you an All Risk policy—after all, putting one together does require a fairly specialist knowledge of the construction industry and the risks you might face. Here are some of the providers who would be happy to offer you coverage.

Before receiving your quote, you may find that insurers need to run your policy past an underwriter before being able to confirm the exact number, so don't be surprised if you have to wait a couple of days before getting the figure.

FAQ's

Contract Works only covers construction materials and structures, such as buildings in progress and anything that will be a part of the end build (such as unattached windows or pipes). A Contractors All Risk policy covers a much wider variety of potential risks, and includes Contract Works within it.

Public Liability will cover you in the event that a third party incurs damages or is hurt as a result of your work and believes you’re at fault. Your Public Liability will cover any compensation awarded and any legal fees you rack up in the process. A Contractors All Risk policy covers far more potential risks than a standalone Public Liability policy, and will often include a form of Public Liability within it so you’re covered no matter what goes wrong.

An escalation clause is an agreement between you and the insurer that continues to cover you, even if the value of the contract exceeds what was initially agreed. Our research indicated that many Escalation Clauses are between 10-20%, but some may be higher or lower from insurer to insurer.

Luke Masters

Prior to NimbleFins, Luke studied economics at Brunel University and worked at FreshMinds, Investigo and BMW. His work in data analytics, pricing, strategy and business development now help him write business insurance content to support SMEs. Read more on LinkedIn.

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The guidance on this site is based on our own analysis and is meant to help you identify options and narrow down your choices. We do not advise or tell you which product to buy; undertake your own due diligence before entering into any agreement. Read our full disclosure here.