Contractors All Risks (CAR) insurance UK
What CAR actually covers
A Contractors All Risks policy responds to physical loss or damage to the project itself while it is being built. That means the permanent works — the structure rising out of the ground; the temporary works that make construction possible — formwork, falsework, scaffolding, shoring; materials for the project, on site, in storage and in transit; and, where selected, construction plant, both owned and hired-in. Fire, storm, flood, theft of materials, malicious damage, collapse: the “all risks” label means the policy covers physical damage unless an exclusion says otherwise, which is a broader promise than a named-perils wording but makes the exclusions the part worth reading.
Hired-in plant deserves its own sentence, because hire agreements — typically on CPA conditions — make the hirer responsible for the plant while it is in their possession, including continuing hire charges after damage. If nobody has arranged hired-in plant cover, that liability sits uninsured on the contractor.
JCT, NEC and who insures what
On any contract of substance, the insurance obligations are written down before anyone pours concrete. The JCT forms deal with insurance of the works through their insurance options: broadly, one route has the contractor insuring new-build works in joint names, another has the employer insuring, and a third deals with work to existing structures, where the employer typically insures the existing building and the works. NEC contracts run a similar allocation through their insurance tables.
Two phrases in those clauses do a lot of work. Joint names means both employer and contractor are insured parties, which stops the insurer paying a works claim and then pursuing the other party by subrogation — the commercial point of the whole arrangement. Specified perils versus all risks defines how wide the required cover is: specified perils is the narrower list (fire, storm, flood and companions), all risks the wider promise. The contract will say which is required and for what. The practical instruction for a contractor is simple: the policy has to be at least as wide as the contract demands, in the right names, for the right values. We read the contract’s insurance clauses against the policy before work starts — that is the job.
Annual policies versus single project cover
A contractor doing a steady flow of projects is usually best served by an annual CAR policy: every contract within the policy’s maximum contract value is covered automatically, with turnover declared and adjusted. The discipline it requires is watching that maximum — win a job bigger than the limit and it is not covered until you tell your broker.
Single project policies suit the exceptions: a project larger than your usual range, a joint venture, a long programme that will outlive your annual renewal, or an employer who wants a project policy in place for all parties. Project policies can be written to run for the construction period plus the defects liability period, which avoids the ugly problem of an annual policy lapsing mid-project.
The interface with professional indemnity
Design and build contractors live on the boundary between two policies, and the boundary is worth understanding precisely. CAR responds to physical damage to the works during construction. Professional indemnity responds to claims arising from professional activities — design, specification, surveys, project management — typically for the financial consequences of getting them wrong. A beam undersized in the design office that fails and brings down part of the structure involves both worlds: the damage may engage the CAR policy (subject to its defect exclusions), while the design error and its wider financial consequences are PI territory. The two policies’ exclusions are supposed to meet without a gap. They do not always, particularly where a CAR defect exclusion is broad and the PI policy carries its own damage exclusions. For D&C contractors we treat CAR and PI as one conversation, because insurers certainly will when a claim arrives.
Existing structures
Work on an existing building — extension, refurbishment, fit-out — raises a separate question: who carries the risk of damage to the structure that was already there? Under the usual JCT arrangement for existing structures, the employer insures the existing building and contents against specified perils in joint names, while the works themselves are insured all risks. That allocation catches people out in both directions: contractors who assume their CAR policy covers the client’s building (it generally does not), and building owners who have not told their property insurer that contractors are about to start work — which most property policies require. Before a refurbishment starts, both policies need to know about it.
Escalation, values and the quiet failures
Most CAR problems are quiet ones. A contract value set at tender that grew through variations and inflation while the sum insured stood still. A maximum contract value on an annual policy that last year’s biggest job fitted under and this year’s does not. Free-issue materials from the client that nobody declared. Plant hired in over a weekend under conditions nobody read. None of these are exotic risks; they are description failures. Our recurring theme applies with full force here: describe the risk properly — the real values, the real contract terms, the real programme — and the policy can be built to match. That is wordings-first broking, and in construction it is the difference between a covered claim and a dispute.
Frequently asked questions
Is CAR insurance a legal requirement?
No statute requires it, but in practice the building contract does. JCT and NEC contracts oblige one party to insure the works, usually in joint names, and principals and main contractors will not let an uninsured contractor on site. For most contractors the real question is not whether to carry CAR but whether the policy matches what their contracts oblige them to insure.
Does CAR cover defective workmanship?
CAR covers physical loss or damage to the works, and wordings exclude the defective part itself to varying degrees — the market’s defect exclusions differ meaningfully in how much resulting damage they give back. The cost of redoing bad work is a workmanship issue; damage the defect causes to other work may be covered depending on the exclusion. Pure design errors that cause financial loss are professional indemnity territory.
Should I buy an annual policy or insure each project?
Contractors with a steady flow of work in a consistent size range are usually better on an annual policy, with all projects covered up to a maximum contract value. One-off large projects, joint ventures or projects above your annual limit are better insured on a single project basis, often with the cover running to match the contract period including maintenance.
What happens if the contract value increases mid-project?
If the sum insured or maximum contract value was set at the original figure and the project grows — variations, material cost inflation, extended programme — you can find yourself underinsured at exactly the wrong moment. Annual policies have maximum contract values that must be watched, and single project policies should be adjusted when variations move the value materially. Tell your broker when the number moves; it is a five-minute fix before a loss and an expensive argument after one.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.