CAR CONTRACTORS ALL RISKS INSURANCE Rohana Alagiyage Part

CAR CONTRACTORS’ ALL RISKS INSURANCE Rohana Alagiyage

Part I – Basic Policy Form Part II – Standstill Insurance

CAR Vs EAR- Erection All Risk Determining factor- Value of Erection & Installation works Less than 50% Above 50% - CAR - EAR

SUBJECT MATTER INSURED CAR may be taken out for all building and civil engineering projects, such as: Residential and office buildings, hospitals, schools, theatres § Production facilities § Infrastructure facilities, airports § Bridges, dams, tunnels and harbors (wet works)

INSURED PARTIES - Jointly CAR insurance should be concluded for all parties concerned to avoid overlaps or gaps in cover: § § § The principal (employer) &/or The main contractor &/or Subcontractors &/or* Project managers &/or Suppliers, if any*. * Un-named

SCOPE OF COVER – Two Sections SECTION 1 - Material Damage to: § Contract works (permanent and temporary works § § § forming part of the contract) Removable of debris Professional Fees Free issue materials Construction Equipment ( Site offices, storage sheds, silos, scaffolding, utilities etc) Construction machinery (earthmoving equipment, cranes, site vehicles) Principal’s existing property SECTION 2 - Third party liability: § Bodily injury & Property Damage

SECTION 1 - Material Damage Cover on ALL RISK basis against unforeseen and sudden physical loss or damage to the insured property from ANY cause other than those specifically excluded

SECTION 2 Where the Insured becomes legally liable to pay as damages consequent upon : § Accidental bodily injury to third parties § Accidental loss or damages to property owned by third party. Occurring in direct connection with construction works insured under Section 1

SCOPE OF COVER - Cont General Exclusions: § Political risks, war or warlike operations, § § § SRCC Nuclear, radioactive contamination Willful act or willful negligence of the insured or their representatives Cessation of work whether total or partial

SCOPE OF COVER - Cont Special Exclusions to section I: § Consequential loss of any kind § Faulty design § Defective material / workmanship (faulty part only) § Mechanical and/or electrical breakdown § Wear and tear, corrosion, gradual deterioration § Road vehicles, waterborne vessels and air crafts § Inventory losses

SCOPE OF COVER - Cont Special Exclusions to section II: § Property insured or insurable under Section I § Vibration, removal, weakening of support § Liability for bodily injury to employee/ workmen of insured parties § Liability for damage to property belonging to insured parties § Motor , Marine & Aviation liability § Contractual liability

PERIOD OF COVER Contractors’ All Risks Insurance Works cover Maintenance period Operational covers (Fire, Allied perils, TPL) Inception date Commencement of works

PERIOD OF COVER Cover ATTACHES from § the commencement of work or § after the insured items have been unloaded at site or § the inception date as specified in the policy Whichever is later And TERMINATES when § the completed structure is taken over or § put into service or § the expiry date specified in the policy Whichever is earlier

CALCULATION OF SUM INSURED § SI must be equal to the amount stated in the building contract plus a value of any free issue material Contractually, insured contractor may be required (e. g. Under FIDIC contracts) to include 15% of CV towards costs of rectification, removal of debris and professional fees Separate sums insured for: • Construction machinery and construction plant and equipment (equal to NRV) • Existing property and clearance of debris (Loss limits) • Third party liability – Section II (as per contact conditions)

PRINCIPLE EXTENSIONS TO BASIC CAR COVER Section I: § Strike, Riot and Civil Commotion § Maintenance Visits Vs Extended maintenance § Expediting Expenses § Airfreight expenses § Offsite Storage § Inland Transit § Designer’s Risk § Contracts works taken over or put into service

PRINCIPLE EXTENSIONS TO BASIC CAR COVER Section II: § Cross Liability § TPL cover during maintenance period § Vibration, removal or weakening of support

PART 2