Contractors All Risks

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Contractors are faced with many risks during their project. A Contractors All Risks Insurance protects contractors from loss or damage contract works and materials, damage to their plant and equipment during the project and even claims from third parties for bodily injury or property damage.

What is covered?

Cover is provided on an “All Risks” Basis. This means that the policy covers all accidental, sudden physical losses to contract works unless specifically excluded in the policy. The cover is split into 2 primary sections:

1- Section 1 – Material Damage: All Risks cover for costs of reinstatement of contract works
following a loss or damage.

Types of losses to contract works that would be covered under this section would include:

  1. Fire & Explosion
  2. Natural Perils (Flood, Storm, Inundation)
  3. Accidental Damage to works
  4. Lightning
  5. Losses from Riots, Strikes or Civil Commotion
  6. Collapse of structures
  7. Impact by vehicles
  8. Malicious Damage
  9. Burglary

– Add on’s:

Contractors can also opt to include cover the following:

  • Their own plant and equipment on an All Risks basis.
  • Cover for Loss or Damage to the Principals (Contractors Client) existing and surrounding property (where required)
  • Cover for Damage to Temporary Facilities such as Site offices

2- Section 2: Third Party Liability: While section 1 covers damage to the contract works and the contractors equipment. C.A.R also covers losses from third parties claims for bodily injury and property damage. During the course of construction, a contractor may cause accidental damage or bodily injury to third parties and is legally liable to pay damages for such incidents.

A few simple examples/scenarios of this would be:

a) A fire starting at the construction site and spreading to a neighboring building or project. The neighbor then sues the contractor for damage to his property
b) A contractor drops a tool from a high rise construction site and it lands on a passer by causing death. The court awards the family of the deceased person blood money for AED 200,000.
c) Vibrations from the use of heavy machinery causing a neighboring building façade glass to crack
d) Damage to municipal underground pipes and services during excavation works. The contractor is ordered by a court to pay for all the damages caused.

Cover is provided on a Limit per occurrence. Limits offered start at AED 500,000 per occurrence and can go up to AED 100,000,000 (or higher) per occurrence where contractually required.

Additional covers bundled into the Contractors All Risks Insurance would include:

  • Costs of Debris Removal
  • Cost of replacing or reproducing damaged Plans and Documents
  • Professional Fees (Architects and Surveyor Fees)
  • Cover for losses during the Maintenance period after project completion
  • Loss or damage to materials and equipment during any inland transit or whilst in an offsite storage location
  • Fire Fighting and Extinguishing Expenses
  • Claims Preparation Charges
  • Cover for additional costs of Overtime, Nightwork & Airfreight following a loss
  • Costs incurred to minimize or reduce a loss

What is Not Covered under a Contractors All Risks Insurance?
Contractors All Risks Insurance would exclude losses from:

  1. War, Political Risks
  2. Nuclear contamination, Nuclear radiation Risks
  3. Damages due to wear and tear
  4. Wilful acts or Wilful negligence
  5. Cessation of works
  6. Injury to own workers
  7. Claims from third parties for Professional Negligence, Errors and Omissions
  8. Fines and Penalties from any legal body.
  9. Gradual Pollution and Contamination
  10. Financial Losses due to Insolvency, Bankruptcy, Default

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