Construction sites are inherently dangerous places. In a notoriously volatile industry, having the right cover is a non-negotiable.
Construction all risk insurance is such a valuable asset for any firm. At Stanmore Insurance, we’re there to help you get the coverage you need under one banner to protect your business, assets and workers wherever they are.
So, what do you need to know about construction all risk insurance?
What is construction all risk insurance?
Construction all risk insurance is also known as contractors’ all risk (CAR) insurance and bundles multiple policies under a single product. It’s designed to take out the complexity and administrative headaches of juggling multiple insurance products.
It’s explicitly aimed at the construction industry, covering everyone from large multinational firms to sole traders. Under business insurance, we would identify your needs and create an insurance policy that was right for you, from accidental loss and damage to theft and public liability.
What does a construction all risk insurance policy cover?
What’s covered under construction all risk cover depends on what you do. At its heart, though, is cover for the physical side of a construction process.
You’ll often see certain types of cover in these policies, including:
- Contract Works — To protect any permanent or temporary works you’re responsible for against accidental loss or damage. Note that this can be extended to cover materials and temporary structures.
- Public Liability — To defend your business against claims made by customers or members of the public who are injured or who experience damage to their property as a result of your operations.
- Employers’ Liability — To cover claims made by employees who are injured or become ill as a result of their work. That includes occupational illness, such as industrial disease, hearing loss from machinery, or respiratory conditions caused by working conditions. UK law requires this for most businesses that hire staff, with a minimum coverage limit of £5 million.
Contractors’ all risk insurance might also be extended to protect your tools and equipment, including those you own and any that you’ve rented. Plus, you might want to take out other forms of business insurance, including lost income protection and cyber insurance.
Does contractors’ all risk insurance cover plant (including hired-in plant)?
Inspect the policy first, as this is not automatic protection. Plant cover is often provided, but only if it’s explicitly mentioned in the policy you take out.
Owned plant cover is there to protect machinery and equipment belonging to your business, whereas hired-in plant cover is designed for assets you’re renting from someone else.
Your policy can cover equipment and machinery under both scenarios, but don’t assume cover is automatic. By working with Stanmore Insurance, we can ensure this coverage is included, if necessary, to avoid unintended coverage gaps.
What is the difference between construction all risk insurance and professional indemnity?
Construction all risk concentrates on the physical risks connected to your work. It includes accidental damage, theft and employee injury. On the other hand, professional indemnity insurance protects against claims made against you due to:
- Professional mistakes
- Negligent advice
- Incorrect specifications
- Poor design
- Errors leading to financial loss
For example, if your building materials are damaged on the site, you’ll claim against your construction all risk cover. Likewise, if your client sues you because they believe your design input led to financial loss, you’ll claim via your professional indemnity policy.
However, this doesn’t mean you need separate policies. Professional indemnity can be added to a contractors’ all risk policy as a separate extension.
How is a construction all risk insurance policy taken out?
Arranging a construction all risk policy can be done in conjunction with an expert broker. It’s usually managed by us looking at the sector, the nature of the work, the requirements for the business and risk.
Other factors an insurer will look at include:
- Business size
- Number of employees
- Equipment
- Maximum contract value
It also matters who will be named on the policy, as this can vary depending on the contract and project. Typically, you should expect the owner of a construction business to be named. Though, it could be the primary contractor, subcontractor, and the developer or employer. This should be arranged in advance so that cover and responsibilities can be properly aligned.
Since this is a variable, it’s wise to speak to a broker like Stanmore Insurance in advance to work this out.
How much should you insure for under a construction all risk insurance policy?
The right insurance level depends on what you’re covering.
- For contract works, it’s usually the maximum value of any one contract or the reinstatement value of the works you’re responsible for.
- For tools and equipment, the insurance value is usually the total replacement cost.
Unlike other industries, working this one out for construction is rarely straightforward. Hence, working with an expert is critical to avoid being accidentally underinsured.
Is construction all risk insurance a legal requirement
Construction all risk insurance doesn’t have a straight legal requirement like employers’ liability insurance. Despite this, it’s standard practice to make this cover mandatory before embarking upon any construction project. Expect to have to provide proof of coverage before any work begins.
Regardless of any legal requirements, construction all risk insurance protects your business. Construction is one of the highest-risk UK industries, frequently showing as the most significant for insurance claims.
Without proper cover, all it takes is one serious incident to damage your profits and put your firm in financial distress. At Stanmore Insurance, it’s our job to give you peace of mind that you’re protected against the worst.
If you’re ready to learn more about this type of tailored insurance coverage, contact us today.
