Contractors' All Risks (CAR) Insurance

Contractors' All Risks (CAR) Insurance Definition

What is 'Contractors' All Risks (CAR) Insurance'

Contractors' All Risks (CAR) insurance is an insurance policy that provides coverage for both damage to a property and third-party injury or damage claims.

In other words Contractors' All Risks (CAR) insurance is a property insurance by which any building or civil engineering project under construction is protected against accidents which may lead to physical damage to or the destruction of works in progress or materials brought to the site.
Contractors' all risk (CAR) insurance policies are considered non-standard insurance policies.

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Types of Risk in Construction Project

Construction projects typically involve two primary types of risk: damage to the property, and third-party claims of injury or damage.
  • Damage to the property
Damage to the property could  include the structure as a result of poor construction, or damage during a renovation.
  • Third-parties Damage
Third-parties, including injuries subtend by subcontractor while working in the engineering project site. Contractors' all risk (CAR) insurance bridges these two risks into a common policy, and helps cover the gap between exclusions that would otherwise exist when using separate policies.

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BREAKING DOWN 'Contractors' All Risks (CAR) Insurance' CAR insurance is typically taken out jointly by both the contractor and the employer, with other parties such as financing companies having the option of being named to the policy. Because multiple parties are included in the policy they each retain the right to file a claim against the insurer, although all parties also have the duty of informing the insurer of any injuries and damages that may result in a claim.

Why Contractors' All Risks (CAR) Insurance

Aim and objective of CAR insurance policy is to ensure the protection of all parties involves in a project, regardless of the type of damage to the property or who caused the damage. Insurers who underwrite this type of policy lose the right to subrogation, meaning that if it pays out funds to one party in the contract then it cannot seek to recover those funds from another party in the contract. For example, if the owner of a large building and the contractor working on the building are on the same CAR policy, any costs of damage to the building caused by the contractor can be recovered by the building owner when a claim is filed. The insurer, however, cannot seek to recover funds from the contractor.

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Contractors' All Risks Insurance Coverage

Risks often covered under a CAR policy. The following risk are covered under Contractors' All Risks Insurance, fire, flood, wind, earthquakes, water damage and mold, construction faults, and negligence. These insurance policy do not cover poor workmanship, wear and tear or willful negligence


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