Understand what contractors all risk insurance covers and as a construction company or builder why you need the coverage
As a Willis Towers Watson Network Broker, we are experts in builders insurance and work with the best contractors all risk insurance companies to arrange policy coverage on your behalf. The below guide will help construction companies and builders understand the difference between contractors all risk insurance and contract works insurance.
Contractors all risk insurance is a flexible policy designed to meet the needs of construction companies on building sites. Coverage can include contract works, public liability, product liability, employers' liability, own plant, hired-in plant, and JCT insurance.
It’s important to work with a specialist construction insurance broker when reviewing your needs. Typically, the contracts (i.e. JCT) will identify who is responsible to purchase the necessary insurance policies.
Contract works insurance is one cover available under a CAR policy, however when clients, architects, or project managers refer to contractors 'all risk' in isolation, they will be seeking contracts works.
With many different parties involved in construction projects, it's important that you work with an expert to arrange the necessary insurance covers. We've produced the below guide for contractors and builders to explain how contractors all risk insurance can protect your business.
Contract works insurance is cover that can reinstate or repair the building works resulting from any damage (hence the name 'all-risks')
Public liability insurance is cover for claims arising from injury or property damage from customers, suppliers, bonafide subcontractors or third persons.
Contract works insurance will help protect the work in progress on a construction site in the event of damage before responsibility has been handed to the principal. Note if you are working on an existing structure, the existing structure will not be covered and should be insured by the property owner. Contract works insurance will cover any loss or damage to the property and materials.
Public liability insurance and product liability insurance helps protect against claims arising from injury or property damage of persons other than your employees (i.e., customers, suppliers, contractors or third persons) in the course of your construction activities.
Employers' liability insurance helps protect against claims arising from injury or illness of your employees. Note all companies under UK law have a legal duty to protect the safety of their employees at work. It is one of the few types of insurance compulsory in the United Kingdom.
Own plant and equipment insurance helps protects against damage to own plant and equipment whilst in your custody or control or hired out under a defined agreement. For example: scaffolding, temporary buildings, site office contents and site welfare facilities.
Hired-in plant and equipment insurance will help protect your legal liability under the terms of your hiring agreement to pay compensation for damage to hired-in plant, whilst in your custody or control.
Employee tools insurance will help protect against damage to personal tools and effects belonging to an employee, or principle. Cover can vary from policy to policy, so consider whether you have the protection you need.
Non-negligence insurance, otherwise known as JCT 6.5.1, helps protects against claims should there be damage to a neighbouring property due to the works carried out arising from collapse, subsidence, heave, vibration, weakening or removal of support, or lowering of groundwater, which is not the result of negligence.
Business interruption insurance protects against the loss of income from being unable to trade as a result of an insured event (i.e. property damage). The contractor's all risk cover will help protect against the consequential loss of the interruption to trade by indemnifying the policyholder for the loss of income as a result of the insured peril.
Anyone working on a building site should consider arranging contractors all risk insurance. Which covers you decide to purchase will depend on a number of factors including your responsibilities, contractual requirements, size and risk appetite.
Your contract with the client will typically set out the responsibilities of each party, including who is contractually obliged to insure the various elements of the build. Talk to a specialist construction insurance broker about your individual requirements.
Contractors all risk insurance can also be packaged as tradesman insurance for smaller businesses, tradespersons, or construction companies with up to 10 employees, and less than 35% turnover paid to subcontractors.
Whilst a CAR 'all risk' policy can provide for a number of covers designed specifically for the construction industry, this does not mean your business shouldn't consider other insurance policies. To discuss your business needs, speak to one of our expert construction insurance brokers.
Get professional indemnity insurance to help protect against mistakes, incorrect advice, design, specification, and negligence.
Get D&O insurance for individuals against civil, criminal, and regulatory proceedings, whilst acting in a managerial capacity.
How much contract works insurance you will require will be a significant price determining factor. If a fire were to destroy the build you were responsible, the size of the maximum possible loss will impact your premium cost calculation.
Basement works, timber construction, demolition works, quarrying, tunnelling, flood exposed areas, road construction, bridgework, external work on high-rise buildings, piling, ground stabilisation, underpinning, are all considered high risk and therefore increase your premium cost.
Additional security features that will improve your risk profile and reduce your premium cost. These can include cameras, alarms, boundary fence, and 24 hour security.
Contract works under a contractor all risks insurance policy will typically be purchased on an annual basis by the respective parties, for their own needs. An annual contract works policy will cover all work undertaken in that year, up to a maximum contract value per project. This is usually the most cost-effective solution for contractors who typically undertake multiple projects each year. Larger building projects may prefer to arrange their CAR insurance for all parties on a project specific basis. However, issues can arise if there are delays in construction and this extends past the agreed policy period.
Your contract with the principle will typically set out the responsibilities of each party, including who is contractually obliged to insure the various elements of the build under a contractor’s all risk insurance policy. JCT contracts are the mostly commonly used in the UK and will identify what insurance covers you are required to purchase and who's responsibility they are. It's worth considering that its easier for the contractor to arrange the neccessary insurance protections.
Contractors all risk insurance policies can be structured in a way to ensure all parties are covered on a project, regardless of the damage or injury, or who was a fault. This can include 'first loss payee' endorsements for potential project financiers. To make the request, please provide confirmation of the financier legal entity and their address.
Contract works insurance can reinstate or repair the building works in progress. Typically, the contract you agree (i.e., JCT) will more often than not, identify who is responsible for insuring the work in progress. Under a CAR policy you can include the additional liability and property coverages described above.
Legal expenses insurance can assist your business with expert legal advice through a telephone legal advice service. In the event of a claim, the contractor's all risk cover will offer access to legal advice in a range of circumstances, typically relating to your property, employment, or contract disputes.
'All risk' is a type of insurance policy that doesn't name all the insured perils that are covered by the policy. For example, fire, flood, storm, flood, etc. All risk means the policy will respond to all causes of damage to the works in progress.
Both policies refer to the same covers, but different countries will use different terminology to describe. Builder risk is typically used in the US.
The policy coverage for 'construction all risk insurance' is the same, some insurers will brand their products, but the covers are effectively the same.
Please complete our digital onboarding process or give us a call. We will require confirmation of your largest contract over the next 12 months and whether you require an annual or project specific policy. If you require a project specific policy, we will also need confirmation of the site address.
60% of the fall from height fatalities and 30% of major injuries occurred within the construction industry. This equates to 35 fatalities and 938 major injuries, due to falling from height in the construction industry in 2019/20.
Health and safety is at the forefront of corporate responsibility, especially with an increasingly hard line being taken in relation to health and safety cases.