Contractor’s All Risk Insurance

Contractor’s All Risk Insurance offers adequate and comprehensive coverage against damage or loss in respect of construction plant, contract work, construction machinery, and/or construction machinery/equipment. In this way, this policy is designed for architects, construction engineers, and financers as it contributes to reducing the overall expenses of construction. Moreover, in the contractor’s all risk policy offers sufficient financial protection to all the parties involved.

Why is this policy required?

This insurance policy is specially designed for protecting civil contactors against destruction or damage of different construction projects like office, hospital, channels, tunnel, etc. Any accidental damage to these projects or the plants of the contractor or machinery is covered in this kind of policy. Some of the benefits of contractor’s all risk insurance policy are:

  • Most of the plans under this insurance type cover projects of civil engineering where the civil work is more than 50% of the total value of the contract.
  • The plan starts covering the project from the time of storage, construction, and covers till the project gets completed and is handed over to the principal.

Benefits

The common benefits or coverage that most of the policies provide under this plan are:

  • Material Damage: Under this loss, damage, or destruction of property incurred due to any cause other than those excluded in the policy are covered. Most of the policies pay for the losses or damage up to a certain amount that does not exceed the sum mentioned against every item and does not exceed the total sum insured.
  • Third-Party Liability: Under this, the coverage towards:
    • Legal liability related to accidental damage or loss caused to the property of third-person.
    • Legal liability for non-fatal and fatal injuries caused to third-person (other than the own employees or workers of the insured) due to the construction of the property.
    • Perils that are covered under contractor’s all risk policy are:
      • Fire and allied perils
      • Collapse
      • Earthquake, shock, and fire
      • Faults in construction
      • Storm, flood, cyclone, and tempest.
      • Negligence and human errors
      • Water damage

Key Features of Contractor's All Risk Insurance

  • It offers comprehensive insurance cover for civil engineering projects where the value of civil works is more than 50% of the total contract value.
  • The cover operates during storage, erection/construction till completion and the handing over of the works to the principal.

Add-On Coverage:

A policyholder can extend his/her policy to get the following cover as an add-on:

  • Damage incurred to the surrounding property of the contractor’s work.
  • Construction equipment such as shuttering material and scaffolding.
  • Maintenance cover and maintenance visit.
  • Rectification of the original defect or faults incurred during the construction.
  • Damage or accidental loss while carrying out various rectifications during the maintenance period.

Claim Process

Follow the below steps to file a claim for the contractor's all risk policy:

  • Inform the insurance company immediately regarding the damage/loss by phone.
  • After intimating via phone, the insurer must be notified in writing as well regarding the damage or event of a loss. The written notification must include the extent of damage caused to the property.
  • If the loss or damage is caused due to burglary or theft, then the insured should inform the police immediately.
  • The company sends its surveyor for the survey. Therefore, the insured should keep the damaged property/parts preserved for the same.
  • The insured now must submit the duly filled claim form with the following documents to the insurance company:
    • The written statement of the claim having the details of loss or damage of the property.
    • For machinery claims technical damage report.
    • Delivery receipts or purchase invoice.
    • A police report, if it is lodged.
    • Repair or replacement estimate.

What does Contractor's All Risk Insurance cover?

Contractor's All Risk insurance covers sudden and unforeseen physical damage to civil projects under construction insured by any cause or peril not specifically excluded under the policy. It comprises two sections:

Section I- Material Damage:

It provides coverage for the property lost, damaged or destroyed by any cause, other than those specifically excluded in the policy, necessitating replacement or repair. The policy will pay or make good all such loss or damage up to an amount not exceeding the sum specified in respect of each of the items and not exceeding in the whole the total sum insured.

Section II- Third Party Liability:

It provides coverage towards:

  1. a) Legal liability for accidental loss or damage caused to property of other persons
  2. b) Legal liability for fatal or non-fatal injury to any persons other than the insured\'s own employees or workmen or employees of the owner of the works or premises due to construction of any property.

Perils covered under Contractor\'s All Risk insurance include:

  • Fire and Allied Perils
  • Earthquake, fire and shock
  • Flood, storm, tempest and cyclone
  • Collapse
  • Faults in erection/construction
  • Water Damage for Wet Risks
  • Human errors, negligence

Who can take the insurance?

Contractor\'s All Risk insurance can be availed by those who are involved in any way in construction business, such as:

  • Contractors
  • Purchaser or owner
  • Companies financing the project
  • Firms commissioned to carry out the work, including subcontractors

You can also cover all participants under single insurance contract for the whole project to avoid gaps in cover.

What is not covered in Contractor’s All Risk Insurance?

  • War and nuclear risks
  • Partial/total cessation of work
  • Willful act or willful negligence of the insured
  • Defective material or bad workmanship
  • Contractual liabilities
  • Normal maintenance or making good
  • Normal wear and tear
  • Loss or damage due to faulty design
  • Disappearance or shortage (inventory losses)

Compare and Find the Best Cover Online

There are so many companies offering Contractor's All Risk Insurance plans and each of them have a different set of features and benefits that it is mind-boggling to select one. Sometimes you end up buying a plan that though costs less, has conflicting clauses and you practically get nothing when making a claim. Conversely, you might buy a fancy plan paying a higher premium only to realize at a later stage that in reality you didn’t use or never needed those frill items.

PolicyBazaar makes possible comparison and ensures you buy the best-fitted policy. We help you sieve through the numerous policies and get you the best plans based on your needs. You can then compare them side by side and not only save money but also buy a policy that covers you properly. Make an informed choice!

 

How can I buy the best investment plan?

Ans:

It is very simple, easy and convenient. All you have to do is conduct a Google search and compare the best investment options online. It will debunk all the myths and assumptions (if any). Don’t compare just the prices of various investment plans, rather compare benefits, features, and disadvantages as well. It will help you to come across the investment plan that will help you to fulfill your investment goals.

Is there any specific time frame for submitting the claim documents to the insurance provider?

Ans:

Yes, there is a time limit associated with every contractor’s all risk insurance policies offered by different insurance providers for submitting the claim and its related documents.  Since the documents contain all the information related to the policy, thus it is suggested to submit them as soon as possible.

Do one need to notify the insurance company regarding an accident that has caused damage to the contract work?

Ans:

An insured must contact the insurance company immediately after the acciden

What all is not covered in contractor’s all risk insurance policy?

Ans:

This type of policy has only a few exclusions which are common for almost all the insurance providers:

1. Damage or loss incurred due to the nuclear reaction.

2. Damage or loss incurred due to faulty design.

3. Damage or loss incurred due to war or war-like situations.

4. Consequential losses.

How do insurance companies calculate risk?

Ans:

Before quoting the premium for the contractor’s all risk insurance policy, an insurance provider considers different factors. These factors include scope, location, value, and duration of the construction work that one is undertaking.

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