What is Construction All Risk Insurance Policy?OkBima 16 Jan 2023
Construction All Risk Insurance Policy
Certain unforeseen accidents could occur during the execution of a project involving the construction of a building or civil engineering works, resulting in significant financial loss to the contract works, construction / or the principals arising from damage to the contract works, construction of plant and machinery, as well as Third Party Claims. The Construction All Risks (CAR) Insurance was created to protect the Contractors/interests Principal’s against such losses.
Do you require Construction All Risk Insurance Policy?
Although the Principal or the Contractor may purchase a Construction All Risk(CAR) policy, it is normally required of the contractor to obtain a CAR insurance in their joint names prior to the start of the project under the terms of the agreement between the contractor and the principal.
Why do you require Construction All Risk Insurance Policy?
Construction All Risk insurance covers the customer for any contingency beginning with the unloading of materials at the project site and continuing through storage, physical construction/erection, and test runs, as well as maintenance, if covered.
What all are included in Construction All Risk Insurance Policy?
Location Risks: Fire, lighting, theft, burglary, and housebreaking
Testing and commissioning Risks: Failure of safety devices, electricity leakage, insulation failure, short circuit, and explosion.
Natural disasters: Storm, Tempest, Hurricane, Flood, Inundation, Subsidence, Landslide, Rockslide, and Earthquake.
Falling Object Impact: Collision, Crane or Tackle Failure, and Other Handling Risks
Human Element Risks: Negligence, Carelessness, Erection/Construction Errors, Strikes & Riots, Malicious Damage, Terrorism
What all are excluded in Construction All Risk Insurance Policy?
Perils of War and Allies
Insured/his representatives’ deliberate act or wilful carelessness.
Excess for each claim as specified in the policy.
Normal wear and tear, degradation over time, lack of usage, obsolescence, rust, and so on
Any damages or penalties incurred as a result of the Insured’s failure to meet the terms of delivery/completion under his building contract.
Nuclear and Allied Threats
Work has come to an end.
Only while taking an inventory are losses discovered.
Other than erection errors, loss/damage due to bad design, defective material, or casting.
Any type of consequential loss or liability.
Are there any added benefit?
Yes, there are some added benefits which can be availed by paying some nominal charges which provides protection against the following: –
Maintenance coverage is limited.
Coverage for extended maintenance
Debris removal and clearing
Damage to the adjacent property of the owner
Liability to a third party
Losses in a row
Support vibration, removal, or weakening
Loss or destruction as a result of a strike, riot, or civil unrest
Drilling for water wells
Tests that have been Suspended
Automatic increase of Clause
Test Run for a Gas Turbine
Test Run for a Steam Turbine
Marine Offshore Works
Non-Disclosure/Breach of Policy Conditions