CONTRACTOR ALL RISK INSURANCESAR (1).ppt

Construction, all risk, insurance

1. CARCAR
CONTRACTORS’ ALL RISKS CONTRACTORS’ ALL RISKS
INSURANCEINSURANCE
Rohana AlagiyageRohana Alagiyage

2. Part I – Basic Policy FormPart I – Basic Policy Form
Part II – Standstill InsurancePart II – Standstill Insurance

3. CAR Vs EARCAR Vs EAR
EAR- Erection All RiskEAR- Erection All Risk
Determining factor- Value of Erection & Determining factor- Value of Erection &
Installation worksInstallation works
Less than 50%Less than 50%- CAR- CAR
Above 50%Above 50% - EAR- EAR

4. SUBJECT MATTER INSUREDSUBJECT MATTER INSURED
CAR may be taken out for all building CAR may be taken out for all building
and civil engineering projects, such as:and civil engineering projects, such as:
Residential and office buildings, hospitals, Residential and office buildings, hospitals,
schools, theatresschools, theatres
Production facilitiesProduction facilities
Infrastructure facilities, airportsInfrastructure facilities, airports
Bridges, dams, tunnels and harbors (wet Bridges, dams, tunnels and harbors (wet
works)works)

5. INSURED PARTIES - JointlyINSURED PARTIES - Jointly
CAR insurance should be concluded for all CAR insurance should be concluded for all
parties concerned to avoid overlaps or gaps in parties concerned to avoid overlaps or gaps in
cover:cover:
The principal (employer) &/orThe principal (employer) &/or
The main contractor &/orThe main contractor &/or
Subcontractors &/or*Subcontractors &/or*
Project managers &/orProject managers &/or
Suppliers, if any*.Suppliers, if any*.
* * Un-namedUn-named

6. SCOPE OF COVER – Two SectionsSCOPE OF COVER – Two Sections
SECTION 1- Material Damage to:SECTION 1- Material Damage to:
Contract works (permanent and temporary works forming part Contract works (permanent and temporary works forming part
of the contract)of the contract)
Removable of debrisRemovable of debris
Professional FeesProfessional Fees
Free issue materialsFree issue materials
Construction Equipment ( Site offices, storage sheds, silos, Construction Equipment ( Site offices, storage sheds, silos,
scaffolding, utilities etc)scaffolding, utilities etc)
Construction machinery (earthmoving equipment, cranes, site Construction machinery (earthmoving equipment, cranes, site
vehicles)vehicles)
Principal’s existing propertyPrincipal’s existing property
SECTION 2 - Third party liability: SECTION 2 - Third party liability:

Bodily injury & Property DamageBodily injury & Property Damage

7. SECTION 1- Material DamageSECTION 1- Material Damage
Cover on ALL RISK basis against Cover on ALL RISK basis against
unforeseen and sudden physical loss or unforeseen and sudden physical loss or
damagedamage to the insured property from ANY to the insured property from ANY
cause other than those specifically cause other than those specifically
excludedexcluded

8. SECTION 2SECTION 2
Where the Insured becomes Where the Insured becomes legally liablelegally liable to to
pay as damages consequent upon :pay as damages consequent upon :
Accidental bodily injury to third parties Accidental bodily injury to third parties
Accidental loss or damages to property Accidental loss or damages to property
owned by third party.owned by third party.
Occurring in direct connection with construction works insured under Occurring in direct connection with construction works insured under
Section 1Section 1

9. SCOPE OF COVERSCOPE OF COVER - Cont - Cont
General Exclusions:General Exclusions:
Political risks, war or warlike operations, Political risks, war or warlike operations,
SRCCSRCC
Nuclear, radioactive contaminationNuclear, radioactive contamination
Willful act or willful negligence of the Willful act or willful negligence of the
insured or their representativesinsured or their representatives
Cessation of work whether total or partialCessation of work whether total or partial

10. SCOPE OF COVERSCOPE OF COVER - Cont - Cont
Special Exclusions to section I:Special Exclusions to section I:
Consequential loss of any kindConsequential loss of any kind
Faulty designFaulty design
Defective material / workmanship (faulty part only)Defective material / workmanship (faulty part only)
Mechanical and/or electrical breakdownMechanical and/or electrical breakdown
Wear and tear, corrosion, gradual deteriorationWear and tear, corrosion, gradual deterioration
Road vehicles, waterborne vessels and air craftsRoad vehicles, waterborne vessels and air crafts
Inventory lossesInventory losses

11. SCOPE OF COVERSCOPE OF COVER - Cont - Cont
Special Exclusions to section II:Special Exclusions to section II:
Property insured or insurable under Section IProperty insured or insurable under Section I
Vibration, removal, weakening of supportVibration, removal, weakening of support
Liability for bodily injury to employee/ workmen of Liability for bodily injury to employee/ workmen of
insured parties insured parties
Liability for damage to property belonging to insured Liability for damage to property belonging to insured
partiesparties
Motor , Marine & Aviation liabilityMotor , Marine & Aviation liability
Contractual liabilityContractual liability

12. PERIOD OF COVERPERIOD OF COVER
Contractors’ All Risks InsuranceContractors’ All Risks Insurance
Works coverWorks cover Maintenance Maintenance
periodperiod
Operational covers (Fire, Allied Operational covers (Fire, Allied
perils, TPL)perils, TPL)
Inception date Inception date
Commencement ofCommencement of works works

13. PERIOD OF COVERPERIOD OF COVER
Cover Cover ATTACHESATTACHES from from
the commencement of work orthe commencement of work or
after the insured items have been unloaded at site orafter the insured items have been unloaded at site or
the inception date as specified in the policythe inception date as specified in the policy
Whichever is laterWhichever is later
And And TERMINATESTERMINATES when when
the completed structure is taken over orthe completed structure is taken over or
put into service orput into service or
the expiry date specified in the policythe expiry date specified in the policy
Whichever is earlierWhichever is earlier

14. CALCULATION OF SUM INSUREDCALCULATION OF SUM INSURED
SI must be equal to the amount stated in the building contract SI must be equal to the amount stated in the building contract
plus a value of any free issue materialplus a value of any free issue material
Contractually, insured contractor may be required (e.g. Under Contractually, insured contractor may be required (e.g. Under
FIDIC contracts) to include 15% of CV towards costs of FIDIC contracts) to include 15% of CV towards costs of
rectification, removal of debris and professional feesrectification, removal of debris and professional fees
Separate sums insured for:Separate sums insured for:
•Construction machinery and construction plant and equipment Construction machinery and construction plant and equipment
(equal to NRV)(equal to NRV)
•Existing property and clearance of debris (Loss limits)Existing property and clearance of debris (Loss limits)
•Third party liability – Section II (as per contact conditions)Third party liability – Section II (as per contact conditions)

15. PRINCIPLE EXTENSIONS TO BASIC CAR PRINCIPLE EXTENSIONS TO BASIC CAR
COVERCOVER
Section I:Section I:
Strike, Riot and Civil CommotionStrike, Riot and Civil Commotion
Maintenance Visits Vs Extended maintenanceMaintenance Visits Vs Extended maintenance
Expediting ExpensesExpediting Expenses
Airfreight expensesAirfreight expenses
Offsite StorageOffsite Storage
Inland TransitInland Transit
Designer’s RiskDesigner’s Risk
Contracts works taken over or put into serviceContracts works taken over or put into service

16. PRINCIPLE EXTENSIONS TO BASIC CAR PRINCIPLE EXTENSIONS TO BASIC CAR
COVERCOVER
Section II:Section II:
Cross LiabilityCross Liability
TPL cover during maintenance periodTPL cover during maintenance period
Vibration, removal or weakening of supportVibration, removal or weakening of support

17. PART 2PART 2