CAR- Contractor All Risk Policy
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What is CAR or Contractor All Risk Policy?
The Contractor All Risk (CAR) Policy provides coverage for contractors against a wide range of risks and damages that may occur during the construction of a project. It includes protection for both the contractor’s property and third-party property at the construction site. The policy covers various perils, such as accidents, fire, theft, natural disasters, and damage caused by human errors. In the event of any covered losses, the insurance company will compensate the contractor or the affected third party, providing financial security and peace of mind during the construction phase.
⛦Example Scenario: Theft on Site – A small business, Suppose Mayank, working on Site where the goods are stolen on-site by some theft. let us see How a CAR (Contractor All Risk) Policy Helps an Interior Decorator Company in Case of Theft on Site.
1. Theft Incident: During the construction of a luxurious residential project, a theft occurs at the construction site. Expensive materials, furniture, and fixtures worth thousands of rupees are stolen overnight.
2. Coverage under CAR Policy: Since the interior decorator company has a CAR policy in place, they are protected against unforeseen events like theft on the construction site.
3. Damage Compensation: The insurance company, upon receiving the claim, investigates the incident and assesses the value of the stolen items. The insured interior decorator company is eligible to receive compensation for the total value of the stolen materials, furniture, and fixtures as per the policy coverage.
4. Financial Protection: The CAR policy helps the interior decorator company in recovering the financial loss caused by the theft incident. It allows them to replace the stolen items and continue their project without significant financial setbacks.
5. Smooth Project Progress: With the insurance payout, the interior decorator company can promptly replace the stolen materials and maintain the project’s progress on schedule. This ensures that the project continues smoothly without delays or cost overruns.
6. Client Confidence: The interior decorator company can assure their client that despite the theft, the project will be completed on time and as planned, thanks to the protection offered by the CAR policy. This helps in maintaining client trust and satisfaction.
7. Legal Liabilities: If the theft caused any damage to neighbouring properties or resulted in third-party claims, the CAR policy might also provide coverage for legal liabilities, protecting the insured company from potential lawsuits.
8. No Additional Financial Burden: Since the interior decorator company had the foresight to secure a comprehensive CAR policy, they do not bear the burden of replacing the stolen items with their own funds, saving them from a financial strain.
9. Business Continuity: The CAR policy ensures the continuity of the interior decorator company’s business operations even in the face of unexpected incidents like theft. It safeguards their financial stability and reputation.
10. Peace of Mind: By having a CAR policy, the interior decorator company gains peace of mind, knowing that their investment in the project and their efforts are protected against various risks, including theft, during the construction phase.
Coverages of CAR or Contractor All Risk Policy
Property Damage Coverage
Provides protection for the contractor’s property, including materials and machinery, in case of accidental damage or loss.
Third-Party Property Coverage
Covers damages to neighbouring properties or buildings at the construction site.
Theft and Burglary Coverage
Offers financial compensation in case of theft or burglary on the construction site.
Natural Disasters and Acts of God
Provides coverage for damages caused by natural disasters like floods, storms, and earthquakes.
Fire and Explosion Coverage
Ensures protection against damages from fire or explosions on the construction site.
Accidental Damage Coverage
Covers damages due to accidents, collapses, or human errors during construction.
Construction Equipment Coverage
Provides protection for construction equipment, tools, and machinery.
Delay in Project Completion
Offers coverage for additional expenses due to project completion delays.
Legal Liabilities Coverage
Covers legal liabilities for third-party injuries or property damage.
Additional Add-ons of CAR (Contractor All Risk) Policy in India
Extends coverage to protect against damages or losses caused by acts of terrorism during the construction project.
Professional Indemnity Coverage
Offers protection against claims arising from errors or omissions in the contractor’s professional services.
Architects and Engineers Coverage
Covers damages caused by design defects or errors made by architects or engineers involved in the project.
Maintenance Period Coverage
Extends coverage during the maintenance period after project completion, protecting against potential defects or issues that may arise.
Inland Transit Coverage
Provides coverage for the transportation of materials and equipment to the construction site from external locations.
Owner Controlled Insurance Program (OCIP) Coverage
Consolidates insurance coverage for multiple projects under a single policy, streamlining the insurance process.
Environmental Liability Coverage
Protects against liabilities arising from environmental damages or pollution caused during the construction process.
Loss of Profit (Consequential Loss) Coverage
Offers financial compensation for loss of profit resulting from project delays caused by covered perils.
Expediting Expenses Coverage
Covers additional expenses incurred to expedite the repair or replacement of damaged materials or equipment.
Sue and Labor Clause
Covers expenses incurred by the insured contractor to prevent or minimize potential losses during a covered event.
Machine Breakdown Cover
Provides coverage for sudden and unforeseen breakdown of machinery used during the construction, ensuring timely repair or replacement without significant financial burden on the contractor.
Design Defect Liability Cover
Protects against claims and losses arising from design defects in the construction project, providing financial security to the contractor against potential legal liabilities. “
Major Differences Between CAR (Contractor All Risk) and EAR (Erection All Risk) Policy
|Aspect||CAR Policy||EAR Policy|
Scope of Coverage
Covers construction projects, including material damage and third-party liabilities at the construction site.
Specifically designed for erection, installation, and commissioning of machinery or plants. Provides coverage for the risks involved in the installation process.
Nature of Projects Covered
Applicable to a wide range of civil construction projects, such as buildings, roads, bridges, etc.
Tailored for projects involving the assembly and installation of machinery, plants, or industrial equipment.
Coverage during Construction
Protects against damages during construction, including accidental damage, theft, fire, and natural disasters.
Provides coverage during the erection phase, safeguarding against risks during the installation and commissioning of machinery.
Covers third-party property damage and bodily injury claims arising from construction activities.
Offers coverage for third-party liabilities related to the erection process, such as damages to surrounding properties during installation.
Machinery and Equipment
Typically includes coverage for construction machinery, tools, and equipment used in the project.
Focuses on machinery and equipment being installed or erected, providing coverage for any damage or breakdown during the process.
Offers coverage throughout the construction period until project completion.
Provides coverage from the start of erection until the machinery or plant is successfully commissioned.
Use of Policy
Suitable for civil contractors and builders involved in construction projects.
Designed for engineering contractors or companies specializing in machinery installation and commissioning.
The premium is based on the project's size, scope, and risk factors associated with the construction.
The premium is calculated based on the complexity of the erection process, the type of machinery, and the duration of the project.
How to Settle CAR (Contractor All Risk) Claims?
Promptly inform the insurance provider about the incident that caused the claim.
Gather all relevant documents, including the insurance policy, project details, and evidence of damage or loss.
Contact Insurance Provider
Initiate the claim process by contacting the insurance company’s claims department and providing the necessary details.
Survey and Inspection
An appointed surveyor will assess the damages on-site to evaluate the claim.
The surveyor will assess the claim’s validity based on policy terms and conditions.
The insurance company will notify the insured contractor of the settlement amount.
Negotiation (if required)
Negotiate if there are discrepancies in the claim amount.
The insurer will issue the agreed claim payment.
Ensure all necessary documentation is completed, and the claim file is closed.
Exclusions of CAR (Contractor All Risk) Policy
Damages or defects that existed before the policy’s inception are not covered.
Damages resulting from deliberate actions or intentional negligence by the insured are excluded.
Any liability assumed by the contract but not related to the project’s scope is not covered.
War and Nuclear Risks
Damages arising from war, nuclear events, or acts of terrorism are excluded.
Normal Wear and Tear
Damage caused by regular wear and tear or deterioration over time is not covered.
Loss of profit or indirect financial losses resulting from project delays are excluded.
Loss of Documents
Loss or damage to important documents and records is not covered.
Mechanical and Electrical Breakdown
Breakdown of machinery or equipment due to mechanical or electrical issues is excluded.
Damages arising from environmental pollution or contamination are not covered.
Unapproved Design Changes
Damages caused by unauthorized design changes during the construction process are excluded.
Losses Beyond Policy Period
Damages occurring after the policy expiration date are not covered.
Any damages caused intentionally, by fraud, or by illegal activities are excluded. Understanding the exclusions is vital to ensure appropriate risk management and avoid any disputes during claims settlement.
Documents Required for Claim Settlement under CAR (Contractor All Risk) Policy
Copy of the insured party’s Aadhaar card for identification purposes.
GST Registration Certificate
If applicable, provide a copy of the Goods and Services Tax (GST) registration certificate.
Copy of the insured party’s Permanent Account Number (PAN) card for taxation purposes.
A duly filled and signed claim form providing essential details about the incident and the claimant.
Insurance Policy Copy
A copy of the CAR policy, indicating the coverage period and terms and conditions.
A copy of the construction contract or agreement between the contractor and the project owner.
A detailed report of the incident that led to the claim, including the date, time, location, and description of the damages or losses.
Photographs or videos showing the extent of the damage or loss.
In case of theft, burglary, or vandalism, a copy of the police report is filed for the incident.
If a surveyor was appointed by the insurance company, the surveyor’s assessment and report on the damages.
Estimate of Repairs
An estimate of the cost of repairs or replacement for the damaged property or equipment.
Invoices and Bills
Original invoices and bills related to the repairs or replacement expenses.
Statements from witnesses, if available, support the claim.
Proof of Ownership
Documents proving the damaged property or equipment ownership.
Proof of Payment
Receipts or bank statements as proof of payment for the insurance premium.
Any Other Supporting Documents
Any additional documents requested by the insurance company to validate the claim.
Contact Information for Claim Settlement: related to CAR (Contractor All Risk) Policy
If Policy Obtained through Agent/Broker
Claims are the reason we get a car insurance in the first place! Therefore, ensure the claim process of your desired car insurance is smooth and doesn’t take too long. When you’re in trouble, the last thing you want is, to spend all your time and energy in just filing a claim!
If Policy Obtained Directly from Insurance Company
Claim Settlements are basically getting your compensations done right. Claims being such an important part of a car insurance, check for your desired insurer’s claim settlement ratio so that you’re assured that no matter what, your claims will be settled!
Claim Contact Information for Policy from Beemawala.com
If you have taken the policy from Beemawala.com, please use the following contact details to register your claim.