Contractor's All Risk Insurance
Civil engineering projects like buildings, bridges, dams, roads, etc. require huge capital investments and involve high risk of loss or damage. There may be accidents, natural disasters or unexpected happenings which can cause physical damage to the project, subsequently putting the responsibility for loss or damage on the contractor. This is where a Contractor’s All Risks Insurance comes to your aid.
A Contractor's All Risks Policy will cover any damage or loss to a civil engineering project thereby nullifying the risk of heavy losses. Cover is not a ‘named peril’ policy but an ‘all risks cover’, which means that it provides cover in the event of any loss or damage to the insured property unless caused by exclusions in the policy. This all risk policy that protects the interests of all the parties participating in the project, such as the principal, contractors, sub-contractors and financiers. Additionally, it will also protect the construction materials during storage and construction.
The sum insured should be the total project contract value together with the estimated cost of labour and construction materials.
The premium amount paid by the insured will depend on the type, value and duration of the project.
Contractor’s All risk insurance policy can be taken by anyone involved in a civil engineering project as a contractor, subcontractor, financier, or the purchaser or owner
Contractors' All Risk Insurance covers all risks normally associated with a construction project. The policy will provide cover against sudden and unexpected physical loss or damage to the insured property. This policy covers accidents and natural perils both while building materials are in storage and actively being used in construction, unless specifically excluded.
The policy cover begins with the start of the project, from the time the first material consignment is unloaded at the project site and ends when the project is finished or handed over to the purchaser or owner.
A Contractor’s all risk policy covers any unforeseen and sudden physical damage to the property by any cause not specially excluded. This policy shall apply to all insured item while:
- In use or at work
- at rest
- being dismantled for cleaning or overhauling
- being shifted within the premises
- being re-erected
Claim Pay outs
Full cost of replacement of parts plus repair charges cost of dismantling and re-erection. Depreciation is applied only for the parts with limited life. If the repair works are undertaken by the insured actual material and labour costs plus a reasonable quantum of overheads is payable. Salvage is deducted. If the sum insured is not adequate policy pays only proportionately.
The actual market value of item immediately before the occurrence of loss less salvage and depreciation subject to adequacy of sum insured
In both cases freight and customs duty are also paid if they are included in sum insured. Policy excess is deducted from the claim.
Add-Ons and Extensions
The policy cover can be extended to cover the following risks, upon paying an additional premium
- Clearance and removal of debris
- Damage to the owner’s surrounding property
- Third party liability
- Additional customs duty
- Express freight
- Holiday and overtime rates and wages
This policy has ‘named excluded perils’ or specific risks which will not be covered under the policy.
- War and nuclear events
- Wilful acts
- Work cessation
- Inventory losses
- Wear and tear
- Electrical or mechanical breakdown or boiler explosion
- Replaceable parts like bits knives ropes & bolts chains etc.
- wear and tear corrosion damage whilst in transit or due to accidents to carrying vehicle /train/vessel/and craft. This can be insured separately.
- When undergoing test or while used for a purpose different from what was originally intended.
- Damage to plant & machinery working underground.