CONTRACTOR’S ALL RISK INSURANCE POLICY
A civil construction site is susceptible to incidents like pilferage, theft, damage, legal claims etc. We understand that contractors are required to ensure completion of a civil construction project within a stipulated deadline.
A Contractor’s All Risk Insurance Policy comprehensively covers risks including physical loss or damage to property, plant, machinery and tools, works brought on to the site and temporary works erected on-site, as well as third party liability related to work conducted on the site.
Coverage begins from the commencement of work or after unloading of the first consignment at the project site, whichever is earlier, and terminates on handing over of the works to the principal or on expiry of the policy.
Coverage can be extended to include the interest of suppliers / manufacturers, contractors and Subcontractors.
Key Benefits of the Contractor’s All Risk Insurance Policy
Comprehensive coverage A contractor’s all risk insurance policy will give the policy holder the benefit of continuous coverage in the case of any eventuality that might occur during the construction period.
Additional coverage available The contractor’s all risk insurance policy also gives the policy holder the option of buying additional coverage with add-on features. Policy holders can include additional coverage options like removal of debris, express freight, coverage against damage to surrounding property and any agreed upon third party liabilities. A full list of additional coverage options is stated below –
- Glass breakage
- Sites located in earthquake Zones I and II
- Agreed upon third party liabilities
- Air freight, additional customs duty
- Maintenance visits and extended maintenance cover
- Damage or storage risks at fabricator’s premises / workshop
- Clearance and removal of debris
- The property surrounding the construction site
- Construction, plant and machinery
Assign limits The contractor’s all risk insurance policy allows the policy holder to customize the coverage limit on their additional cover options.
Exceptions under the Contractor’s All Risk Insurance Policy
The Contractor’s All Risk Insurance Policy doesn’t cover the following –
- Any sort of losses caused due to damage need to be reported immediately. The Contractor’s All Risk Insurance Policy will not cover losses if it is discovered at the time of taking an inventory.
- The machines used on a construction site need to be well maintained – any kind of damage happening because of lack of attention to regular wear and tear or for that matter, no wear and tear because of lack of usage, gradual deterioration due to atmospheric conditions, rust, scratching of painted or polished surfaces or breakage of glass are not covered under this insurance policy.
- A faulty design leading to damage and eventually a loss to the policy holder is not covered under this insurance policy.
- The policy does not cover the cost of replacing, repairing or rectifying defective material and/or workmanship. Unless there is a physical loss or damage, any cost for rectification or correction of errors during construction are not insured.
- Loss of or damage to files, drawings, accounts, bills, currency, stamps, deeds, evidence of debt, notes, securities, cheques, and packing materials such as cases, boxes, crates are not covered under the Contractor’s All Risk Insurance Policy.
- Most construction contracts have a penalty clause stating that a penalty must be paid by the construction company in case the project is delayed or not delivered as per the agreed time. This penalty is not covered under the Contractor’s All Risk Insurance Policy.
- Construction companies deploy a number of heavy duty vehicles to haul material including vehicles licensed for general road use, vehicles carrying water, cement mixes etc. This also extends to water borne vessels or machinery/equipment mounted, operated, or fixed on floating vessels/craft/barges or aircraft. Any damage caused to the above mentioned vehicles/vessels is not covered under the Contractor’s All Risk Insurance Policy.
Sum Insured and Premium
The sum insured for the Contractor’s All Risk Insurance Policy will be the total value of the project clubbed with the estimated cost of materials required for construction and human labour cost.
Since there are various add-on policies available, the premium will be decided on the basis of the type of policy drawn for the policy holder, the value of the project and the duration of the project.