Contractors’ all risk insurance, also referred to as Contract Works Insurance or Construction Insurance, is a non-standard insurance policy that provides coverage for accidental physical loss or damage that occurs to a property insured during the construction period. It covers the contract works undertaken by the contractor and sub contractors.
There are many risks associated with a construction project, which could result in crippling costs and even possible injury. As a contractor, it is essential that you are adequately covered with the right insurance to protect you against this risk – and give you peace of mind. If the worst were to happen, all risk insurance could be the lifeline that will help your business survive.
Is contractors all risk insurance the same as public liability?
No, contractors all risk insurance is different to public liability insurance. The main purpose of public liability insurance is to protect you from legal liability for injuries inflicted on third parties, such as customers and members of the public.
Public liability insurance also covers property damage that may result from your business activities.
As an example, if your employees were to scratch a client’s walls when moving items, this damage would be covered by public liability insurance. A customer may also slip when walking through your store or office, and this may result in physical injuries. Such incidents are also covered by public liability insurance.
The insurance company will pay the legal expenses related to the damage, and this includes any legal fees. Also, it will cover the compensation for the damage.
Here are some areas which are not covered by public liability insurance, but they are covered under contractors all risk insurance:
- Damage to contract works that result from unexpected issues like floods, fires, and explosions
- Damage to contractors’ machinery or equipment at the worksite
- May not cover hot works and welding
- Issues with the piling, demolition, and excavation works
- Issues with marine cargo and inland transit when shipping goods
Is contractors all risks the same as professional indemnity?
Contractors all risk insurance is different to professional indemnity. The latter is designed to protect you and your construction business from claims made by clients and third parties that may result from negligence, omission, or errors. Professional indemnity insurance also covers intellectual property infringement and defamation cases. It will cover the legal costs and the compensation for the damage.
Here are some areas that are covered under contractors all risk insurance, but are not included in professional indemnity insurance:
- Damage to clients’ property
- Damage to third party property
- Injuries to third parties like passers-by
- Injuries to your employees
Who takes out contractors all risk insurance?
Usually, the contractor and employer will jointly take out contractors all risk insurance policies. Other parties may also be named in the policy, including the financing company. Each party included in the policy will retain the right to file a claim against the insurer. With these policies, all parties are covered without any consideration for the type of damage or the individual who caused the damage.
It is worth noting that the insurer does not have the right to recover funds from another party in the contract and will simply be required to pay out funds to the relevant parties in the contract.
As an example, if the contractor causes damage to a building, the employer can recover the funds from the insurer. In such cases, the insurer will not be able to recover any money from the contractor.
Contractors all risk insurance can be extended to cover the interest of subcontractors, contractors, manufacturers, and even suppliers.
Is contractors all risk the same as contract works insurance?
Many people confuse these two forms of insurance, but they are quite different.
Contract works insurance is taken out by builders, property developers, and other parties involved in construction projects. It is meant to cover the cost of repairing or redoing a project that has been damaged by events such as fires, floods, vandalism, or theft. The insurance will only cover the project to the point it was before the damage occurred.
Depending on the level of insurance purchased, it can cover the cost of labour, materials, and the tools needed to continue with the project.
It is worth noting that contracts works insurance does not cover the cost of repairing existing constructions on the site. For example, if you take out the insurance policy on an extension, any damage to the main building will not be included in the policy. It is strictly meant to cover projects that are in progress. If you want an insurance cover for an existing building, you will need to take out home insurance.
You should go through the terms of the insurance policy to determine what else is excluded. For example, in many cases, contracts works insurance will not cover damage caused by terrorism.
Is all risk insurance the same as property insurance?
Property insurance is also quite different to all risk insurance. It is meant to cover property owners and renters, and it provides coverage for damage resulting from fires, weather, theft, and other risks. Here are some of the common forms of property insurance:
- Homeowners insurance
- Renters insurance or tenants content insurance
- Mobile home insurance
- Landlord insurance
- Flood insurance
- Earthquake insurance
You can read through the terms of the policy or contact us to find out what is covered and what is excluded. In many cases, insurers will not cover items that are very high in value. Such items will be covered by an additional insurance policy.
Does contractors all risk insurance cover hired-in plant?
Contractors all risk insurance is essential to all contractors and employers and it can include cover for own plant, hired-in plant and employees’ tools.
Hired-in plant includes tools, heavy machinery and large equipment which is rented from a supplier. And hired-in plant insurance provides protection against the risk of that plant being damaged, stolen or becoming unusable.
Where all risk insurance cover includes hired-in plant insurance, the insurer will pay out in the case of damage or theft, and this can prove valuable to you and your business, not only covering you for often expensive losses, but also saving you time to keep your current and future construction projects moving forward.