Definition:Contractor all-risks insurance (CAR)
🔧 Contractor all-risks insurance (CAR) is a comprehensive property insurance policy designed to cover physical loss or damage to construction works, materials, and equipment during the course of a building or civil engineering project. Widely used across global construction markets — particularly in the United Kingdom, Continental Europe, the Middle East, and Asia-Pacific — CAR policies are structured on an all-risks basis, meaning they cover any peril not specifically excluded, rather than listing only named perils. The policy typically extends to the contract works themselves, construction plant and machinery, and third-party liability arising from the construction activities, making it one of the most important risk transfer tools in the construction insurance segment.
⚙️ A CAR policy is usually divided into several sections. Section I covers material damage to the contract works, including temporary works and materials brought to site, on an all-risks basis subject to standard exclusions such as wear and tear, design defects (though design cover extensions are available in some markets), and consequential losses. Section II provides third-party liability coverage for bodily injury or property damage caused to others during construction. Some policies include a Section III for existing property of the principal, particularly relevant in renovation or extension projects. The policy period typically runs from commencement of works through to completion and handover, often with an extended maintenance or defects liability period. In London and international reinsurance markets, CAR risks are frequently placed through Lloyd's and the London company market, while in domestic markets across Asia and the Gulf Cooperation Council (GCC) region, local insurers often lead placements subject to national regulatory requirements.
💡 For contractors, project owners, and brokers alike, CAR insurance serves as the backbone of construction risk management because it consolidates the principal physical and liability exposures of a project into a single, coordinated policy. Without it, multiple parties would need to arrange overlapping coverages, creating gaps and disputes when losses occur. The all-risks structure is particularly valuable because construction projects face a wide and sometimes unpredictable range of hazards — from fire and storm damage to theft and accidental collapse — and a named-perils approach would leave significant exposures unaddressed. Underwriters pricing CAR risks assess factors such as project value, construction methodology, soil conditions, natural catastrophe exposure, and the contractor's track record. As construction projects grow in scale and complexity worldwide, and as climate-related perils intensify, the CAR market continues to evolve, with increasing attention to sub-limits, deductible structures, and extensions for delayed start-up or advance loss of profits.
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