Contractors' All Risk Policy

IRDAI License Number: IRDAI/INT/ISNP/2022/250

Cover defense cost
Legal advice, if required
Covernote/Risk Held Letter/Binder Letter Issued immediately after premium payment to the insurance company
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Introduction

Who can take this Policy?

Coverage

Add on Covers

Basis of Sum lnsured

Exclusions

"This policy is specially designed to give financial protection to the Civil Engineering Contractors in the event of an accident to the civil engineering works under construction.In case the policy period exceeds 12 months, the premium can be paid in quarterly instalments with the first instalment being higher by 5% and the last instalment to be paid 6 months before expiry of the policy.

The policy can be taken by the principal contractor or sub-contractor, jointly or separately.

The policy comprises two sections :

Section I - Material Damage : Covering physical loss, damage or destruction of the property insured by any cause, other than those specifically excluded in the policy.
Section II - Third Party Liability : Covering the legal liability falling on the insured contractor as a result of bodily injury or property damage belonging to a third party.

The policy can be extended to cover the following items :

Provision for escalation
Clearance And Removal Of Debris
Additional Rate For Express Freight (Air Freight Excluded) Holiday And Overtime Rates Of the Wages
Additional Rate For Air Freight Only
Additional Custom Duty
Construction Machinery Plants And Equipment’s
Loss Due To Breakage Of Glass
Storage Rate At Fabricators Premises/Workshop
Maintenance Visits and Extended Maintenance Cover

The Sum Insured under CAR Policy is total cost of Construction, Labour Charges, cost of erection if any and Profit.

Faulty design
Rectification of aesthetic defects of structure not relating to any physical loss or damage to the structure due to any accident, or of material defect in workmanship defect.
The exclusion of defective material / workmanship is limited to the parts of the structure immediately affected and does not apply to any consequential loss to correctly executed items, arising out of the accident due to defective material or workmanship.
Loss or damage due to gradual deterioration, atmospheric condition, rusting etc.
Loss discovered only at the time of taking inventory.
Loss arising out of penalty for delay, non-fulfilment of terms of contract.

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Important Points to remember while Buying the Policy

Adequate Sum Insured - To Avoid Underinsurance

Temporary Structure should be clearly mentioned

Almost in every project the requirement of temporary structure is there and in civil work the temporary structure have a vital part. It is the most important aspect to see at the time of taking the policy to clearly mentioned temporary structure and it's sum insured.

Ensure that assets should be covered under the right entity/company

Total Project Sum Insured and Total Project Duration

Total Project Sum Insured and Total Project Duration should be clearly motioned considering the general delays in project. It would be appropriate to insure the maximum period including the projected extension period.

Risk Location/s should be properly mentioned

Premium would be charged form day one in CAR/EAR Policies

Premium would be charged from the beginning of the project i.e. when first consignment reaches at project site or any work started on site or project commissioning date as per LOI/Awarded Contract.

Downloads

Proposal Form

Policy Wordings

Claim Form

Key Documents

General Claim
Intimation Format

Immediate Action Client
Should Take

Indicative General Documents
for Settlement of Claims

Peril Based Documents Required
for Settlement

Peril Based Documents Required for Settlement of Claim

Fire Group - Fire, Lightening, Explosion, Implosion

Fire brigade report if applicable
Lodge a police complaint in case of a fire arising out of - rioting mob, striking workers, malicious damage by third parties.
Meteorological report in case of Storm, tempest, flood and earthquake Photographs of Damaged Property showing extent of damage &/or video film of loss

AOG - Flood, Storm, Cyclone, Earthquake, Subsidence/Landslide

To substantiate quantum of loss, value of damaged insured property just prior to loss, & value of salvage. please make available to surveyors/investigators fixed Asset Register, original Bills/Invoice, Repairs/Replacement Bills/Invoices and stock Register
Newspaper cutting wherein the incidence of occurrence of flood/storm cyclone/earthquake/landslide has been reported
Meteorological Report

Social - Riot, Strike, Malicious Damage and Terrorism (RSMDT)

Police Panchnama/First Information Report/Final Investigation Report
Newspaper cutting wherein the incidence of riots has been reported
Photographs of Damaged Property showing extent of damage &/or video film of loss

Geological - Land Slide, Subsidence, Expensive Soils

Photographs of Damaged Property showing extent of damage &/or video film of loss
To substantiate quantum of loss, value of damaged insured property just prior to loss, & value of salvage. please make available to surveyors/investigators fixed Asset Register, original Bills/Invoice, Repairs/Replacement Bills/Invoices and stock Register
Newspaper cutting wherein the incidence of occurrence of flood/storm/cyclone/earthquake/landslide has been reported
Meteorological Report

Breakdown During Testing/Commissioning

Statement of eye witness to loss about cause of loss & circumstances of loss
Asset Register, log-book, original bills/Invoices/bill of entry of damaged property & repair/replacement bills/invoices to substantiate the quantum of loss (To be made available to surveyor).
Proforma invoices of new machine
Photographs of Damaged Property showing extent of damage &/or video film of loss

Theft and Burglary

Police report mentioning item/s stolen, date of incident and estimate of loss
Police investigation report
Photographs of Damaged Property showing extent of damage &/or video film of loss
To substantiate quantum of loss, please make available to surveyor/investigator, your stock register, original Bills/ Invoice, cash memos, fixed asset register, bank statement, cash-book/ledger
Inventory of articles kept in bank-locker
Letter of Subrogation for transferring rights of recovery to insurance company after the claim is paid

Our Insurance Partners

Claim Case Study - 1

Situation

In a insurance policy for residential project the Sum Insured mentioned in the policy was mentioned under heads Civil Construction, Professional fees etc. but did not specify the Sum Insured for Temporary Structure separately.

Challenge

Since the loss was related to a temporary structure, Surveyor declined it as it was not specifically mentioned in the policy with Sum Insured.

Solution

Back calculation of entire Sum Insured of the project was done, it was found that cost of temporary structure was included in the Project cost. Hence the same was approved later by the Insurance Company.

Advisory/Conclusion

It was advised to the client that it is essential to mention Temporary structure separately with a separate Sum Insured.

Claim Case Study - 2

Situation

In a erection project site which had dugged a borewell, a child of 5 years fell inside the borewell.

Challenge

Family of the child asked for huge compensation from the client, Client was under huge pressure due to the third party liability.

Solution

Third Party Liability Add on was already given in the policy and client was explained how the particular situation can trigger under the addon Third party Liability can be claimed.

Advisory/Conclusion

Various add On available in the policy should be suggested to the client after analyzing the risk of the client.

Need Assistance

FAQ's

PREMIUM

COVERAGES

CLAIMS

OTHERS

How is premium calculated?

Premium is based on project value, nature of project and duration of the project. The premium is reckoned from the date of commencement of project till completion of the project.
Is entire premium for the project payable at one go?

The premium can be paid in installments. The last installment is permissible till six month before completion of project.
What are the Installement option under CAR Policies?

Installments' can be Quarterly, Half yearly or yearly based upon duration of the project.
Are projects policy duration extended on pro rata premium?

If there is a Pro-rata extension clause written in the policy then it is extended on pro rata otherwise it will depend upon various factors such as percentage of work pending, Reason for delay, Bar Chart etc.

Can the contractor insure the project after commencement of project work?

Yes. E.g. plinth of a building is laid and request for insurance is received from the contractor. Subsequent work of the project can be insured after satisfactory inspection by licensed surveyor that there are no known or reported claims on the project. The policy cover would be effective from date of acceptance of premium or date of inspection whichever is later.
Are Wet risks covered by CAR Policy?

Yes, civil structures constructed in/over water bodies can be covered in CAR policies.
Is Erection Portion of risk covered under CAR Policy?

If the portion of Erection work is less than 50% then same can be covered under CAR Policy.
Can the Insurance under CAR Policy be extended due to delay?

In contractor all risk policy, if a project gets extended the same can be endorsed under the policy. You need to inform the insurer in advance about the extension. Additional premium would be charged for the incremental period to extend coverage.

Is dewatering claim payable under CAR policies?

Yes, reasonable pump hire and energy charges are payable unless these are specifically excluded from the policy.
Can damage to Contractors Plant & Machinery be claimed under CAR Policy?

Any claim related to Contractors Plant & Machinery will be payable if its value is part of Sum Insured. CPM Sum Insured must reflect separately in the break-up of Sum Insured.
What are the exclusion under CAR Policy?
The company will not be liable under the policy in respect of loss or damage due to:
- excess as stated in the Policy Schedule
- loss discovered only at the time of taking an inventory
- normal wear and tear, gradual deterioration due to atmospheric conditions
- the cost of replacement, repair or rectification of defective material and/or
- the cost necessary for rectification or correction of any error during construction
- any damage or penalties on account of the Insured's non-fulfillment of the terms of delivery or completion under his Contract of construction or of any obligations assumed there under or lack of performance
- loss or damage to vehicles licensed for general road use or water borne vessels etc.
What if there is a damage found in material at storage site but it is diffcult to figure out when did the loss occurred i.e either during transit or storage at site?

It is also recommeded to opt for 50:50 clause under Marine and CAR Policy. If this clause would be there then Marine Policy and CAR Policy would share 50% of the claim amount each.

Why CAR Policy is required?

The policy covers civil construction projects built for residential, commercial or industrial use.
Who can take this policy?

The policy can be taken by the Principal, Contractor or sub-contractor, jointly or separately.
What is the minimum period for which CAR Policy can be issued?

Minimum Period for which CAR Policy can be issued is 3 Months.
What is the Maximum period for which CAR Policy can be issued?

Maximum Period for which CAR Policy can be issued is 84 Months.