What is Contractors’ All Risk Insurance Policy?
Contractors’ All Risk Insurance is an insurance policy that safeguards your entire construction project against multiple risks. It covers construction costs, contract works, both permanent and temporary , material damages, third-party liabilities, and more.
Construction projects, whether small-scale or large-scale, are more than just structures. They involve significant costs and are a dream in the making.
The average construction cost per square foot in India for basic structures ranges from ₹1,200 to ₹1,800 for commercial buildings and ₹1,200 to ₹1,400 for residential buildings. This means for a basic 2,500 sq. ft. commercial building, the construction cost would typically range from ₹30 lakhs to ₹45 lakhs. This could run into crores for large-scale commercial projects. Unforeseen events, such as a fire or a natural disaster, can affect such projects entirely, leading to major financial losses.
A Construction All Risk Insurance policy helps cover all these risks under one single policy. TATA AIG offers a comprehensive Contractors’ All Risk policy with extensive coverage, customisable to meet specific project needs.
What is Contractors’ All Risk Insurance Policy?
Contractors’ All Risk Insurance is an insurance policy that safeguards your entire construction project against multiple risks. It covers construction costs, contract works, both permanent and temporary , material damages, third-party liabilities, and more.
Construction projects, whether small-scale or large-scale, are more than just structures. They involve significant costs and are a dream in the making.
The average construction cost per square foot in India for basic structures ranges from ₹1,200 to ₹1,800 for commercial buildings and ₹1,200 to ₹1,400 for residential buildings. This means for a basic 2,500 sq. ft. commercial building, the construction cost would typically range from ₹30 lakhs to ₹45 lakhs. This could run into crores for large-scale commercial projects. Unforeseen events, such as a fire or a natural disaster, can affect such projects entirely, leading to major financial losses.
A Construction All Risk Insurance policy helps cover all these risks under one single policy. TATA AIG offers a comprehensive Contractors’ All Risk policy with extensive coverage, customisable to meet specific project needs.
Who Should Buy Contractors’ All Risk Insurance?
Contractors’ All Risk policy should be purchased by any business with a financial stake in a construction project.
Contractors, Builders, Construction Companies
To prevent financial losses arising from unexpected events that could damage the construction site, materials purchased, or labour investments made.
Project Owners, Engineering Firms
To safeguard their project execution to ensure that the construction work continues without disruptions, leading to timely completion.
Hospitality and Commercial Chains, Healthcare Institutions
To protect their expansion projects from major financial losses due to unexpected events.
Infrastructure Investors
To safeguard their investments in large-scale construction projects that can result in substantial financial losses.
Financiers and Lenders
To secure the loans provided to builders, which may be at risk if unforeseen events impact the project, affecting their repayment schedule.
Why Should You Purchase Contractors’ All Risk Insurance?
Protection against Unforeseen Risks
Covers a wide range of risks, such as accidental damages, fire, and natural disasters that can impact the construction site and lead to heavy losses.
Complete Protection
Covers the entire construction period, from when the materials get transported to the site to project completion, offering complete protection.
Safeguard Investments
Protects investments made in phases from losses caused by unexpected events during the project.
Coverage for Repair or Replacement of Damaged Materials
Covers the cost to repair or replace damaged materials to resume project work without financial stress.
Compliance with Project Requirements
Helps contractors comply with project agreements that require covering the cost of damages.
Key Features of TATA AIG Contractors’ All Risk Insurance
1
Extensive Coverage
Includes the cost of construction, as well as permanent and temporary contract works.
2
Extended Period of Coverage
Protects your project for its entire duration, from the start to the end, even if it is planned for multiple years.
3
Wide-ranging Risk Protection
Covers a wide range of risks, including location-specific risks, handling-related risks, and natural disasters.
4
Optional Add-ons
Offers optional add-ons, such as air freight cover, escalation cover, and more to enhance protection.
5
Option to Extend Protection
Allows you to extend your policy if the project exceeds the original duration.
6
Additional Coverage
Covers the cost of clearing and removing debris from the site after an insured event to restart work promptly.
Types of Construction Projects Covered
- Residential and Commercial Buildings and related sundry work
- Hotels, Motels, Restaurants, Hospitals, Airport Buildings and their Facilities
- Theatres, Auditoriums and Cinema Halls.
- Factory sheds, Warehouses, Cold storages, Hangars.
- Chimneys, Silos and Cooling Towers
- Dam, Reservoirs, Tanks
- Roads, Flyovers, Bridges, Subways
- Interior Decoration work
Benefits of Buying Contractors’ All Risk Insurance Policy For Your Business
Comprehensive Risk Coverage
Offers complete protection against various kinds of risks that could affect the construction project throughout its duration.
Minimises Downtime
Covers unexpected financial expenses, ensuring the project continues without any major delays.
Protection for all Stakeholders
Ensures all stakeholders remain protected as the unexpected risks are covered under the Insurance for Construction Company and the project progresses.
Flexibility
Allows you to customise the Builders’ All Risk Insurance to suit your business needs based on the type of construction work, sum insured and optional add-ons.
Builds Trust Among Stakeholders
Having adequate financial protection reassures lenders, investors and other stakeholders that the project will be functional under any circumstances.
Ensures Project Continuity
Helps businesses recover from damages faster and continue the project without any major delays.
What is Covered Under TATA AIG Contractors’ All Risk Insurance Policy?
Material Damage
- Covers loss, damage, or destruction of any part of the insured property (excluding packing materials).
- Covers loss due to any cause not specifically excluded, provided it requires repair or replacement.
Location Risks
Covers the cost of loss or damage caused by fire, explosion, theft, burglary, lightning, and more.
Handling Risks
Covers the cost of loss or damage resulting from the impact of falling objects, crane failures, collisions, and similar incidents.
Natural Disasters
Covers major perils, such as earthquake (fire and shock), landslide, flood, storm, hurricane, cyclone, collapse and water damage.
Removing Debris
Covers the cost of clearing and removing debris up to the maximum specified limit.
Third-Party Liability
Covers legal liability for accidental damage to third-party property or for injury or death to third parties due to construction work
Please note: Inclusions are subject to specific terms and conditions. Please refer to the policy document for complete details.
What is Not Covered Under TATA AIG Contractors’ All Risk Insurance Policy?
General Exclusions
- The excess amount to be paid by the insured.
- Losses found only while taking an inventory.
Gradual Deterioration
- Normal wear and tear, rust and scratching of painted or polished surfaces.
Defective Material
- Loss or damage due to a faulty design.
- Cost to repair or replace defective material.
- Cost to rectify construction errors, unless resulting in physical loss or damage.
Performance-Related Issues
- Consequential losses and operational issues on completed work.
- Penalties due to not meeting the deadlines.
Items, Equipment, and Vehicles
- Cash, cheques, etc.
- Loss or damage to vehicles designed for road use and waterborne vessels.
Damage to Own Property
- Loss or damage to property owned by the project owner, contractor, or related employees.
Injury or Illness
- Bodily injury or illness to employees or workers involved in the project. Employers can purchase the Workmen’s Compensation Insurance Policy to offer financial support to the employees in case of work-related injuries, disabilities, or death.
- Bodily injury or illness to family members.
War, Nuclear Perils, and Terrorism
- Loss or damage due to war or war-like situations such as civil war, rebellion and mutiny.
- Loss caused by nuclear radiation or radioactive contamination
- Any act of terrorism.
Please note: This is a general list of exclusions. For the complete and detailed list, please refer to the policy document.
Add-ons Under Contractors' All Risk Policy
Owner’s Surrounding Property
Covers any damage or loss caused to the owner’s property due to the construction project and its related risks.
Escalation Cover
Provides coverage for increased costs, such as material damage exceeding the sum insured, due to factors like inflation.
Clearing Debris
Covers the cost of removing debris from the construction site due to damages caused by an unexpected incident.
Express Freight
Covers additional expenses for transporting materials through express services to avoid delays.
Air Freight
Covers additional expenses of transporting materials via air transport to help resume the construction project work faster for the progress.
Overtime Wages Cover
Covers the cost of paying workers for overtime when required to meet project delivery timelines.
Professional Fees
Covers the cost of hiring professionals like architects and engineers to continue with the project work after an unexpected incident affecting the construction site.
Construction Plant and Machinery
Covers the cost of repairing or replacing machinery and equipment damaged due to physical loss or damage at the construction project site
Additional Customs Duty Cover
Covers additional customs duty charges payable for importing materials to resume the construction project work.
50:50 Clause
If damage occurs and it cannot be determined whether the loss happened during transit (marine insurance stage) or during construction (Contractors’ All Risk stage), the claim is equally shared between the Marine Insurance and Contractors’ All Risk Insurance policies. This clause resolves disputes between these two types of policies, which would otherwise leave the insured in a difficult position to receive coverage.
72 Hours Clause
Loss or damage to the insured property within 72 hours of a fire accident will be considered as a single event.
Terrorism
Covers loss or damage to construction projects and the related financial losses due to acts of terrorism.
Please note: This is a general list of optional add-ons. Please contact us for the complete list.
Eligibility Criteria to Buy Contractors' All Risk Insurance
Any individual or business involved in a construction project can purchase the Contractors’ All Risk Insurance Cover. Key eligibility criteria points to note:
The project must be legally approved as per government regulations.
It must comply with all applicable safety regulations.
Proper documentation for the entire project must be available.
Documents Required to Buy Contractors' All Risk Insurance Policy
Duly filled proposal form
Project details, including Principal Name and Address, Contractor’s Name and Address, Project Period, Location, Description of Contract Works, and Materials used.
KYC documents, such as PAN, Proof of Company Registration and PAN
Estimated project cost
Construction schedule
Contract agreement, if applicable
Licenses or Permits
Risk assessment
Previous insurance policy details, if applicable
Documents Required to Buy Contractors' All Risk Insurance Policy
Duly filled proposal form
Project details, including Principal Name and Address, Contractor’s Name and Address, Project Period, Location, Description of Contract Works, and Materials used.
KYC documents, such as PAN, Proof of Company Registration and PAN
Estimated project cost
Construction schedule
Contract agreement, if applicable
Licenses or Permits
Risk assessment
Previous insurance policy details, if applicable
How is the Premium Calculated for Contractors’ All Risk Insurance?
1
Total Project Value
The total project cost is a significant factor in determining your premium. A higher project value means a higher Contractors’ All Risk Insurance cost.
2
Nature and Scale of Construction Work
The type of construction project and its scale, whether it is large or complex, will also impact your premium.
3
Project Duration
Construction projects can take multiple years to complete. The longer the duration, the higher the risk exposure and the premium.
4
Location and Risk Exposure
The location of your project is a key factor. If it is in a region prone to natural calamities or other high-risk factors, the premium is likely to be higher.
5
Optional Add-ons
The type and number of add-ons included in the policy can significantly affect your Contractors’ All Risk Insurance cost.
6
Safety Measures
Effective safety measures can help reduce the risk of accidents and damage. If you follow standard safety protocols, your premium may be lower.
7
Previous Claim History
If you have a history of frequent claims, it indicates high risk. This can lead to an increase in your premium.
How to Choose the Right Contractors’ All Risk Insurance Policy for Your Business?
Assess the Construction Project
Evaluate your construction project in terms of its size, location, and potential risks. Also, take into consideration stakeholder requirements, if applicable.
Evaluate the Scope of Coverage
Based on your project assessment, determine whether you need a basic policy or one with add-ons. You can seek guidance from our experts to make a well-informed decision.
Review Policy Features
Review the Contractors’ All Risk Insurance policy inclusions, such as the coverage for material damage and third-party liabilities, and the specific policy terms and conditions that apply.
Include Add-ons
Customise your policy by including the necessary add-ons. For instance, you can add Contractors’ Plant and Machinery Insurance to safeguard your high-value equipment against the repair or replacement costs due to physical loss or damage.
Understand Policy Conditions and Exclusions
Understand what is covered and not covered under the Contractors’ All Risk policy. This will help you know the coverage limits and decide which add-ons can be included.
Calculate the Premium
Ensure the sum insured is adequate to cover potential risks while staying within your budget. For high-value projects, paying a slightly higher premium is a strategic investment as it provides significant protection against major losses.
Why Should You Purchase Contractors’ All Risk Insurance For Your Business from TATA AIG?
Coverage for Diverse Projects
We offer financial protection for various construction projects, including residential and commercial buildings, flyovers, bridges, tunnels, interior decoration, and more.
High Sum Insured
Our policy covers material damages and third-party liabilities with the sum insured required to secure high-value construction projects.
Customisable Solutions
We offer multiple add-ons, such as Escalation Clause, Air Freight, Additional Customs Duty, to customise and enhance coverage based on your specific project needs.
Professional Assistance
We extend access to expert assistance to help you assess risks and evaluate the required sum insured.
Digital Support
We provide personalised digital support through the TATA AIG app, or you can simply contact us for quick support.
Brand Reputation
We bring over 20 years of trusted experience in the insurance industry to ensure dependable protection and service.
How to File a Claim for Contractors’ All Risk Insurance?
1
Inform TATA AIG
Report the incident to TATA AIG both over the phone and in writing. Please visit our contact us page for more details.
2
Take Steps to Minimise Damage
Preserve the damaged parts and take the necessary steps to minimise further loss or damage. A surveyor will be assigned to inspect the construction site.
3
Cooperate with the Surveyor
Assist the surveyor by providing all the necessary details to help with the site inspection.
4
Submit Documents
Get the list of required documents from the surveyor and submit them promptly without delay.
5
Claim Settlement
We will review the claim request and the supporting documents. Upon approval, the claim will be settled for the applicable losses.
Key Takeaways
Construction projects are planned ahead of time and require substantial investments. Companies, engineering firms, or any other financial institutions involved in the project can face significant financial losses in the event of an unexpected event impacting the project work. With TATA AIG’s Contractors’ All Risk Insurance policy, businesses can secure their construction projects against major financial losses. TATA AIG’s range of SME Insurance plans is designed to offer comprehensive coverage to businesses across various industries against financial risks. For construction businesses, the Contractors’ All Risk policy offers targeted coverage for the entire project, built on trust and delivered with reliability.
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Frequently Asked Question
What is the CAR policy full form?
CAR policy stands for Contractors’ All Risk Insurance policy. It offers financial protection for an entire construction project against various risks, such as fire and natural disasters. It covers the cost of construction, material damages, and third-party liabilities.
What is the difference between CPM, CAR, and EAR insurance policies?
CPM stands for Contractors’ Plant and Machinery Insurance and offers protection for the machinery and equipment used in construction projects.
CAR refers to Contractors’ All Risk Insurance and covers the entire construction project against potential risks, such as fire, man-made calamities, and natural disasters. This covers material damages and third-party liabilities.
EAR stands for Erection All Risk Insurance and offers financial protection for the erection of a machine or a complete plant against potential risks.
What is the declaration of projects in the Contractors All Risk Policy?
The declaration of projects refers to providing complete details of your construction project, including the project name, location, estimated cost, and duration. It includes the description of contract works, materials used, and contract agreements, if applicable.
What is the Bill of Quantities in the Contractors All Risk Policy?
A Bill of Quantities refers to a detailed list of the specific materials used and labour employed for a construction project insured under the Contractors’ All Risk policy.
How many sections are there in a Contractors’ All Risk Insurance policy?
The Contractors’ All Risk Insurance policy has two major sections: Material Damage and Third-Party Liabilities. Under Material Damage, it covers loss, damage, or destruction of any part of the insured property (excluding packing materials). It covers damages due to any cause not specifically excluded, provided it requires repair or replacement.
Under Third-Party Liability, it covers legal liability for accidental damage to third-party property or for injury or death to third parties due to construction work.
What is the 72-hour clause in insurance?
The 72-hour clause means that any loss or damage caused to the insured property occurring within 72 hours of a fire accident will be considered as a single event and covered under the Contractors’ All Risk policy.
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