Contractors / Erection All Risk Insurance

Policy Overview

Contract Works Insurance, often referred to as Contract All Risks (CAR) and Erection All Risks (EAR) Insurance, is designed to provide comprehensive protection for construction projects. This cover applies to accidental physical loss or damage to works under construction, including events such as fire, storm, lightning, malicious damage, impact, and theft. The policy covers damage to materials on site, those stored remotely, and limited cover while in transit. Contract Works Insurance is essential for protecting the value of your project from start to finish, ensuring you are covered for both on-site incidents and damages during transport.

These policies are typically divided into two sections. Section 1 covers the physical construction works, providing insurance against damage to the project under construction, whether it involves building works (under CAR) or the erection of plant and machinery (under EAR). Section 2 extends the coverage to third-party liability, including personal injury or property damage claims from unrelated third parties. Additionally, the policy includes a maintenance period, offering protection against defects, errors, and omissions that may require rectification after the project is completed.

Contract Works Insurance is usually purchased by construction firms, builders, and trades such as plumbers, electricians, and engineering firms. However, the policy can also be purchased on a principally controlled basis, where the owner of the project takes out the insurance on behalf of the contractor and all associated trades. This is common in Owner Builder scenarios, where the project owner wants to ensure full coverage for everyone involved in the project.

The policy can be extended to include cover such as:

• Existing structure covering that portion of the improvement on the site which aren’t being worked upon, yet could be the subject of a loss;
• Materials supplied by the owner / principal,
• Off site storage of materials,
• Transit,
• Contractors tools and equipment including onsite unregistered mobile plant.
• Delay in start up (DSU) and Advanced Loss of Profits (ALop) covering the financial loss associated with the delays at the commencement and completion of the project.

Major Exclusions:

• Cessation of works and abandonment,
• All cost incurred in gradual deterioration,
• Atmospheric conditions such as rust, oxidisation, mildew and insects such as termites, moths and vermin,
• Breakdown,
• Inventory shortage,
• Cash and securities,
• Fines and Penalties,
• Piling foundation and retaining walls unless specifically required,
• Asbestos,
• Computers and Electronic data.

The information provided on this page that may have been implied is General Advice only and does not take into consideration your specific needs, risk appetite or financial requirements. Please contact our office to discuss and review your needs and the appropriate financial product best suited to meet your requirements . Before purchasing any financial product, you should always read the Product Disclosure Statement to ensure the product is suitable for your needs.