Contractor all risk insurance, often shortened to CAR, protects construction and renovation projects against physical loss or damage to the works, against claims from third parties affected by the work, and, where it is included, against the cost of injury to the workers on the project. It brings these exposures into a single policy that runs for the life of the contract. For contractors, sub-contractors, and the principals who engage them, it is the cover that has to be in place before work can begin. We structure contractor all risk cover around the project, its value, and the parties involved.
What contractor all risk insurance covers
A contractor all risk policy is built around the core exposures of a construction or renovation project, and is commonly arranged in three parts. The first, material damage, covers sudden and unforeseen physical loss or damage to the contract works, the permanent and temporary works, and the materials on site, from any cause that is not specifically excluded, along with construction plant and equipment where these are not separately insured. The second, third-party liability, covers the contractor's legal liability for accidental bodily injury to third parties, or damage to their property, occurring in connection with the works. The third, where it is included, is work injury compensation for the workers engaged on the project, meeting the employer's obligation under the Work Injury Compensation Act. Packaged covers, such as those for renovation and fit-out, frequently bundle all three, often extending to a contractor's sub-contractors of every tier.
Often required before work can begin
For most projects, this cover is not optional in practice. Principals, developers, main contractors, landlords, and building managements routinely require a contractor to hold it, with the works insured to the full contract value and third-party liability to a specified limit, before granting access to the site. A main contractor is also commonly responsible for the cover relating to its sub-contractors. For many contractors, arranging the policy correctly is a condition of being awarded or starting the job.
How it relates to public liability and workers
Two distinctions are worth drawing. First, the third-party liability within a contractor all risk policy relates to the specific project and its site, which is why principals require it for the contract rather than relying on a contractor's general public liability cover. Second, injured workers and injured members of the public are handled by different parts of the cover: injury to your own and your sub-contractors' workers falls under work injury compensation insurance (WIC), required by the Work Injury Compensation Act, while the third-party liability section responds to injury to the public and damage to neighbouring property. Many contractor and renovation packages bundle the work injury compensation section into the same policy, so that all three exposures sit together; on larger or standalone projects it may be arranged separately. Either way, both belong in a complete arrangement.
Project or annual cover
Cover can be arranged for a single project, running from the start of work through to completion and often into the defects liability period that follows, or on an annual basis for a contractor that runs many projects, with works declared against an agreed profile. The right structure depends on how your business takes on work. A business with one large project and a business turning over many small ones are best served differently.
Who should consider it
Contractor all risk cover is relevant across construction and fit-out: main contractors and sub-contractors, renovation and interior contractors, mechanical and electrical installers, and the developers and principals who commission the work. The greater the contract value, and the closer the work sits to occupied buildings or the public, the more important each part of the cover becomes.
Where the exposure sits
The decisions that matter are the sum insured, the parties, and the period. The works should be insured to the full contract value, because understating it can trigger an average clause that reduces a claim. The policy should name the right parties, the principal and relevant sub-contractors, so that everyone who needs the protection has it. And the period should extend through the defects liability phase, when damage can still emerge after the works are handed over. Packaged plans also commonly exclude higher-risk activities, such as piling, demolition, deep excavation, or work above a certain height, which need cover arranged on different terms. Reviewing the sum insured, the named parties, the third-party limit, the period of cover, and any excluded activities is where the protection is decided.
How we structure it
We take time to understand the project, its full contract value, the parties involved, and what the contract and the principal require, and we place cover with our appointed insurers around that. We make sure the works are insured to value, the right parties are named, and the period covers the defects liability phase, and we review the arrangement as the project changes. We remain your point of contact if a claim is made. The aim is cover that matches the contract and is in place before work starts.