Contractors All Risk Insurance

A builders expert guide about contractors all risk insurance

Understand what contractors all risk insurance covers and as a construction company or builder why you need the coverage

 Contractors All Risk from the Willis Towers Watson Network

Contract works insurance and contractors all risk insurance explained

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.

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What is contractors all risk 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.

 What is contractors all risk insurance?

What are the most common covers under a contractors all risk policy?

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.

Looking for contact works or contractors all risk? We can separate or combine your builder's liability and property coverage

Quotes for contractors all risk insurance from the wholesale market starts at £468 annually or £39 a month

What coverage sections can help offer protection under a contractors all risk insurance policy?

The below guide explains the main coverage sections provided to contractors and builders under a contractors all risk insurance policy. Additional covers that can be included are Non-negligence insurance (JCT 6.5.1), business interruption, personal accident, and terrorism.

Contract works

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 & product liability

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.

Own plant & equipment

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

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

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.

What additional builders all risk insurance covers are available?

Non-negligence (JCT insurance)

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

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.

What builders need contractors all risk insurance?

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.

What does contractors all risk insurance not cover?

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. 

Consider builders all risk insurance to protect your business from 3rd-party compensation claims and property losses

Tradespersons, building contractors and construction companies may all require the coverage provide under a CAR policy

How is builder's contractor's all risk insurance cost calculated?

How insurers calculate your contractors all risk insurance cost will depend on a number of factors because each provider will have their own method of assessing your risk of claim. However, there are common areas that underwriters will focus on calculating your contract works insurance cost:

Contract value

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.

Type of project

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.

Security

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.

Frequently asked questions

Do you need an annual contractor all risks insurance policy or project specific?

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.

Who should purchase the project's contract works insurance cover?

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.

Do we need a first loss payee endorsement?

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.

Contact works vs contractors all risk insurance?

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.

What is legal expenses insurance?

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.

What does 'all risk' mean under an insurance policy?

'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.

Is 'contractors all risk' and 'builders risk insurance' different?

Both policies refer to the same covers, but different countries will use different terminology to describe. Builder risk is typically used in the US.

Is 'construction all risk insurance' different?

The policy coverage for 'construction all risk insurance' is the same, some insurers will brand their products, but the covers are effectively the same.

How to obtain a contractor all risk insurance quote?

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.

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