What is contractors' all risks insurance?

Reviewed by Apex Insurance Brokers · Last reviewed 2026-08-05

If you build, renovate, fit out or extend property for a living, most of your financial exposure sits on the site itself: half-finished works, stacks of materials, hired plant and your own tools. Contractors' all risks insurance is the policy built around that exposure. It sits at the heart of most construction insurance programmes and is often a contractual requirement before you can start work. Design-and-build contractors can read about a specialist PI broker for design-and-build contractors before deciding how to approach the next renewal.

What contractors' all risks insurance actually covers

CAR is usually sold as a modular package. You take the sections that match how you work and leave out the ones you don't need. Common components include:

• Contract works — the building or structure you are creating, including permanent materials already incorporated, against sudden and accidental damage while work is ongoing.
• Materials on site — unfixed materials and goods awaiting installation, covered against fire, theft and weather damage.
• Plant, tools and equipment — owned or hired-in plant, hand tools and site equipment. Hired-in plant cover often includes continuing hire charges after a loss.
• Temporary buildings — site huts, offices, containers and scaffolding you are responsible for.
• Employees' and visitors' effects — personal property lost or damaged on site, within stated limits.

Most CAR packages are bought alongside two further covers that are not part of CAR itself but almost always sit next to it: public liability (injury to third parties or damage to their property caused by your work) and, if you have staff, employers' liability. Employers' liability is compulsory for most UK employers under the Employers' Liability (Compulsory Insurance) Act 1969, with a minimum cover level of £5m.

How it differs from professional indemnity (PI)

This is the distinction that trips up most contractors. The two policies answer completely different questions.

Contractors' all risks deals with physical damage to the works and site. If a fire destroys a partly built extension, or thieves strip copper piping from a site overnight, that's a CAR claim.

Professional indemnity deals with financial loss caused by your professional work — design, advice, specification or certification. If you design a structural element and that design is later found to be flawed, the resulting claim is a PI matter, not a CAR one. PI has become important for the building trades because design-and-build contracts push design responsibility onto the contractor.

Many contractors need both. A traditional labour-only bricklayer with no design responsibility may need CAR and public liability but little or no PI. A design-and-build principal contractor almost certainly needs all three. If you are unsure which side of the line your contracts sit on, that's exactly the conversation to have with a broker before you sign.

Why contracts often make CAR compulsory

Contractors' all risks isn't just prudent — it is frequently written into the building contract itself. Standard-form contracts published by the Joint Contracts Tribunal (JCT) contain insurance provisions requiring the works to be insured on an all-risks basis, and set out who is responsible for arranging that cover. The JCT offers alternative insurance options covering new-build works and works to existing structures, and the option chosen decides whether the employer or the contractor takes out the policy.

Getting this wrong has real consequences: if the contract says you must insure the works and you haven't, you may be in breach before the first brick is laid, and you could be left personally footing the bill for a major site loss. Reading the insurance clause in the contract — and matching your policy to it — matters as much as the cover level itself.

Cover levels and things to check

CAR limits are set by reference to the value of the works, not a flat figure. When arranging cover, pay attention to:

• Contract value / estimated cost of works — under-declaring can trigger average and reduce a claim payment.
• Maximum contract value — an annual policy usually caps the size of any single job it will cover.
• Plant and tools limits — separate single-item and total limits, and whether hired-in plant is included.
• Maintenance / defects period — whether cover continues after practical completion while you return to fix snags.
• Existing structures — on renovation and extension work, cover for the client's existing building, which is a common gap.

Illustrative liability limits such as £1m, £2m or £5m are common options for the public and employers' liability sections; the right figure depends on your contracts and the sites you work on. A broker can help you avoid both under-insurance and paying for cover you'll never use. You can start a quote online and we'll build the package around your actual work.

Common questions

Is contractors' all risks insurance a legal requirement?

Not by statute in itself, unlike employers' liability. However, it is routinely required by building contracts (such as JCT forms) and by clients, so in practice you often cannot start a job without it.

Does CAR cover faulty workmanship?

Generally no. CAR responds to sudden, accidental physical damage — not the cost of correcting defective work itself. Claims arising from negligent design or advice fall under professional indemnity, and poor workmanship is usually excluded, so check the wording carefully.

Do I need CAR and public liability, or just one?

They cover different things. CAR protects the works and your own property on site; public liability protects you if your work injures a third party or damages their property. Most contractors carry both, usually within the same package policy.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This guide is general information, not advice on a specific policy or a substitute for your policy wording.