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Contractor’s All-Risk Insurance Policy
The Contractor’s All Risk Insurance Policy offers comprehensive coverage for the loss or damage to construction plant and equipment, machinery, along with third-party claims related to bodily injury and property damage during civil engineering project execution. This insurance option proves advantageous for architects, engineers, and financiers engaged in construction projects, contributing to the reduction of overall construction expenses and ensuring timely and budget-friendly project completion.
Characteristics and Advantages of the Contractors All Risk Policy
Below are some of the features and benefits of Contractor’s All Risk insurance:
- Contractors All Risk provides comprehensive insurance coverage for civil engineering projects wherein the value of civil works constitutes more than 50% of the total contract value.
- The Construction All Risk policy functions from storage and erection/construction to completion, encompassing the period until the works are handed over to the principal.
- Material Damage: Within this coverage, any loss, damage, or destruction of property resulting from causes not excluded in the policy is included. The majority of policies compensate for losses or damages up to a specified amount, not surpassing the sum stated for each item and the total sum insured.
- Third Party Liability: Under this, the coverage towards:
- Legal liability arising from accidental damage or loss to the property of a third party.
- Legal liability for non-fatal and fatal injuries resulting from the construction of the property to a third party, excluding the insured’s own employees or workers.
- Perils covered under the online contractor all-risk policy are:
- Collapse
- Perils related to fire and its risks.
- Faults in construction
- Earthquake, shock, and fire
- Perils such as storms, floods, cyclones, and tempests.
- Water damage
- Negligence and human errors
What are covered under the Contractor's All Risk Insurance?
The following are covered by Contractor’s All Risk insurance:
Section I- Material Damage: Contractors All Risk coverage offers protection for property loss, damage, or destruction caused by any reason, except those explicitly excluded in the policy, requiring replacement or repair. The policy will reimburse for such losses or damages up to a limit, as specified for each item and not exceeding the overall sum insured.
Section II- Third Party Liability: Here is the coverage of the contractor all-risk policy against third-party liabilities:
- Legal liability for accidental loss or damage caused to the property of other individuals.
- Legal liability for fatal or non-fatal injuries to any individuals, excluding the insured’s employees or workers, as well as the employees of the owner of the works or premises, resulting from the construction of any property.
The perils covered under Contractor’s All Risk insurance include:
- Earthquake, fire and shock
- Fire and Allied Perils
- Human errors, negligence
- Floods, storms, tempests and cyclones
- Collapse
- Faults in erection/construction
- Water Damage for Wet Risks
What are not covered under the Contractor's All Risk Insurance?
The contractor’s all risk insurance policy excludes coverage for the following:
- Partial or total cessation of work
- Intentional action or deliberate neglect by the policyholder.
- War and nuclear risks
- Liabilities arising from contracts
- Defective material or poor workmanship
- Loss or damage resulting from a faulty design
- Routine maintenance or rectification
- Ordinary wear and tear
Add-On Coverage
Policyholders have the choice to enhance their coverage by buying the following add-ons provided by the insurer.
A policyholder has the option to extend their policy to obtain the following cover as an add-on:
- Damage suffered by the surrounding property of the contractor’s work.
- Construction equipment like shuttering material and scaffolding.
- Rectification of the original defects or faults incurred during construction. Damage or unexpected loss that happens while fixing things during the maintenance time.
- Disappearance or shortage (inventory losses)
- Maintenance cover and maintenance visit.
Why is the Contractors All Risk Policy Necessary?
The Contractors All Risk insurance policy is specifically crafted to safeguard civil contractors from the destruction or damage of diverse construction projects such as offices, hospitals, channels, tunnels, etc. This type of policy covers any accidental damage to these projects, as well as the contractor’s plants or machinery. Some of the advantages of a contractor’s all-risk insurance policy include:
- Most of the insurance plans in this category provide coverage for civil engineering projects where the civil work constitutes more than 50% of the overall contract value.
- Coverage under the plan commences during the storage and construction phases, extending until the project is successfully completed and handed over to the principal.
Who can buy Contractor’s All Risk Insurance Policy?
Contractor’s All Risk insurance can be obtained by individuals engaged in any capacity in the construction business, including:
- Purchaser or owner
- Companies providing financial support to the project.
- Contractors
- Companies assigned to execute the work, including subcontractors.
All participants can be covered under a single insurance contract for the entire project to prevent any gaps in coverage.
How to Initiate a Claim Under Contractor’s All Risk Insurance Policy?
Follow the steps below to submit a claim for the contractor’s all risk policy:
- Notify the insurance company promptly about the damage or loss by phone.
- After informing via phone, the insurer should also be informed in writing about the damage or loss event. The written notification should detail the extent of damage to the property.
- In case of loss or damage resulting from burglary or theft, the insured must immediately inform the police.
- The company dispatches its surveyor for the assessment. Hence, the insured should preserve the damaged property/parts for the same.
- The insured is now required to submit the properly completed claim form along with the following documents to the insurance company:
- The written claim statement contains details of the loss or damage to the property.
- For machinery claims, a technical damage report is required.
- Delivery receipts or purchase invoices.
- Repair or replacement estimate.
- A police report, if lodged.