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CONTRACTOR'S ALL RISKS (CAR) INSURANCE

WHAT IS A CONTRACTOR'S ALL RISKS (CAR) INSURANCE?

Remarkable progress is being achieved in the field of industrialization in India. There is an on-going process to build the necessary infrastructure for speedy socio-economic development. The infrastructure comprises projects ranging from Airports to bridges, from dams/tunnels to Off-shore structures, from refineries to reservoirs, from pipelines to power stations, from factories to hospitals etc., Hence the need for insurance at the constructional phase.


Contractor's All Risks (CAR) Insurance is the construction phase policy and issued for the period of project or 'One time' policy. This is specially designed policy to protect the interest of contractors and principals in respect of civil engineering projects like construction of buildings, bridges, factories, power stations etc.,


The C.A.R. policy provides an "All Risk" cover. Every risk is covered which is not specifically excluded. This means that almost any sudden and unforeseen loss or damage occurring during the period of insurance to the property insured on the construction site is indemnified.

The more important causes of losses indemnifiable under C.A.R. insurance is:

  • Fire, Lightning, Explosion
  • Flood & Inundation
  • Windstorm of any kind
  • Earthquake, Landslide, Subsidence
  • Theft & Burglary
  • Accidental damage
  • Bad workmanship, Lack of skill, negligence
  • Malicious acts or human error
  • Collapse, impact etc
  • Act of terrorism etc
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Add-on Covers:

  • Clearance and removal of debris
  • Third Party Liability
  • Surrounding property of the insured
  • Escalation

Maintenance Visits Cover:

During the said period this insurance shall cover solely loss of or damage to the contract works caused by the insured contractors (s) in the course of the operations carried out for the purpose of complying with the obligations under the maintenance provisions of the contract.

Extended Maintenance Cover:

During the maintenance period this insurance shall cover loss or damage to the contract works:

  • Caused by the insured contractor (s) in the course of the operations carried out for the purpose of complying with the obligations under the maintenance provisions of the contract.
  • Occurring during the maintenance period provided such loss or damage was caused on the site during the erection period.

Exclusions:

No Liability under the policy in respect of;

  • The amount of loss shown as "Excess"
  • Loss discovered at the time of inventory.
  • Normal wear and tear, rusting etc
  • The cost of correction of any error during construction unless resulting in physical damage.
  • Files, drawings, currency, cheques, etc
  • Packing materials such as cases etc
  • Penalties on account of the Insured’s non-fulfilment of terms of delivery or completion under his contract of construction.
  • Loss or damage due to faulty design.
  • Cost of repair or replacement of defective material and/or workmanship. However, this applies to the particular item affected but does not exclude damage to correctly executed items resulting from an accident due to such defective material and/or workmanship.
  • Vehicles licensed for general road use, or waterborne vessels or equipment mounted on such vessels.
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THIRD PARTY LIABILITY:

This cover is at the option of the insured, indemnity applies to legal liability of the insured to pay compensation for accidental loss of or damage to property of other persons and/or fatal or non-fatal injury to any person, subject to the limit of indemnity specified in the schedule.


In addition, indemnity applies to legal costs recovered by a claimant and also costs incurred by the insured with the written consent of insurers.


General Exclusions:

No indemnity is applicable in respect of loss, damage or liability arising out of

  • Wilful act or wilful negligence of the insured or of his responsible representative.
  • Cessation of work, whether total or partial.
  • War and kindred risks and nuclear risks

Conditions:

  • The insured shall take reasonable precautions and comply with company’s recommendations and statutory requirements.
  • Notification of material changes in the risk and payment of additional premium.
  • Notice of claim, within 14 days of the occurrence of loss. Documentary evidence as required by the company. Notice to the police if the loss is due to theft.
  • The company is subrogated to the rights and remedies of the insured to recover from other parties responsible for the loss.
  • Rateable contribution of loss, if there are other insurances covering the same loss.
  • Differences regarding quantum of claim to be submitted to arbitration.
  • If the claim is fraudulent all benefit under the policy is forfeited.
  • Cancellation of the policy by the insured on a short period basis; If by the company, pro-rata refund of premium.

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