A construction site is one of the most exposed environments a business will ever run — open to fire, flood, storm, collapse, theft and human error, often with millions of rupees of works and third-party risk in play. Contractors' All Risk insurance wraps that entire exposure into a single, comprehensive cover for the whole project period.
01. What Contractors' All Risk (CAR) is
Contractors' All Risk is a comprehensive, project-specific policy that protects civil construction works during the construction period. It is an "all risk" cover — it responds to physical loss of or damage to the works from any cause except those specifically excluded, and it adds third-party liability arising out of the project. A single policy can cover the principal (owner), the main contractor and sub-contractors together.
Its sibling, Erection All Risk (EAR), does the same job for projects dominated by the erection of plant and machinery. CAR is the right cover where civil works predominate — buildings, roads, bridges, factories, water and other infrastructure.
02. Who needs it
- Project owners / principals protecting their capital investment.
- Main contractors and sub-contractors responsible for the works under the contract.
- Anyone bound by contract or lender conditions to insure the project — CAR is frequently a tender or financing requirement.
03. The two sections of cover
Section I — Material Damage
Physical loss or damage to the permanent and temporary works, construction materials, and (optionally) construction plant, machinery and equipment on site.
Section II — Third-Party Liability
Legal liability for third-party bodily injury or property damage arising out of the execution of the project at or around the site.
Together they cover the two things that can go wrong on a site: damage to the project itself, and harm caused to people or property around it.
04. What it typically covers
Subject to the wording, CAR responds to a broad range of perils, including:
- Fire, lightning, explosion and aircraft damage;
- Flood, inundation, storm, cyclone and allied perils;
- Earthquake, landslide, rockslide and subsidence (as covered/added);
- Theft and burglary from the site;
- Collapse, and damage from faulty workmanship or human error during construction;
- Impact damage and a wide range of accidental physical loss not otherwise excluded.
05. Common add-on covers & extensions
A CAR programme is shaped through extensions matched to the project's risk profile:
| Escalation | Automatic uplift in sum insured for cost increases during the build. |
| Earthquake & STFI | Cover for earthquake and storm/tempest/flood/inundation where applicable. |
| Terrorism | Loss or damage arising from terrorist acts. |
| Design defect (LEG/DE clauses) | Extends cover in respect of loss connected with defective design, to varying levels. |
| Surrounding property | Damage to the principal's existing/surrounding property. |
| Debris removal & professional fees | Clean-up costs and architects'/engineers' fees for reinstatement. |
| Owner's / offsite storage | Materials stored off site or in the owner's custody. |
| Maintenance / defects liability period | Cover extending into the post-completion maintenance period. |
06. How the sum insured works
Section I is written on the completed / full contract value of the project — the total value on completion, including materials, labour, freight, customs duty, and materials supplied by the principal. Under-declaring the contract value invites average (proportionate reduction) at claim stage, so the figure must be complete and kept current through escalation.
Section II third-party liability is written on an agreed limit of indemnity appropriate to the site and its surroundings. The policy period runs for the construction schedule, with an optional maintenance/defects-liability extension.
07. What it does not cover
Typical Exclusions
- •Normal wear and tear, gradual deterioration, rust and corrosion;
- •The cost of rectifying defective material or workmanship itself (as distinct from resulting damage);
- •Consequential loss, delay, loss of contract and liquidated damages/penalties;
- •War, nuclear risks and willful negligence of the insured;
- •Inventory losses found only at stock-taking.
08. At the time of a claim
On damage, notify the insurer immediately, take reasonable steps to prevent further loss, and preserve the affected works for inspection. A surveyor is appointed to assess the loss; clean documentation — project records, photographs, cost estimates and repair invoices — drives a faster settlement.
09. How Aurevian helps
No two projects carry the same risk. Aurevian helps you declare the contract value correctly, select the right extensions, negotiate deductibles and wording, coordinate cover across principal and contractors, and manage claims from first notification through surveyor settlement — so the policy actually performs when the site is under water or the crane comes down.
“On a construction site, the question is not whether something will go wrong — it is whether you are covered when it does.”
