Construction

Construction all risks insurance

~4 min read

Category: Construction insurance · Reviewed by the Apex broking team · Last reviewed 2026-08-21

In short: Construction all risks (CAR) insurance covers physical loss or damage to the permanent and temporary works of a construction project during the construction period, together with materials, plant and equipment on site. It is normally arranged in joint names so that the employer, the main contractor and sub-contractors are all insured, and on UK building contracts the obligation to arrange it is set by the contract itself — under a JCT form, by the chosen insurance option.

Category: Construction insurance Also known as: CAR insurance, contract works insurance, contractors all risks Related concepts: contractors all risks, property insurance, environmental impairment liability insurance

Definition

CAR insurance is a project or annual policy covering the works under construction. The insured property is the permanent works as they are built, the temporary works supporting them, unfixed materials and goods delivered to site, and usually own and hired-in plant, tools and site huts, each under its own item and limit. Cover runs from the start on site to practical completion, and typically extends through a defined maintenance or defects liability period for damage arising from the contractor returning to make good.

It is a property cover, not a liability cover. Injury to third parties and damage to other people's property are dealt with by public liability; defective design is dealt with by professional indemnity. A construction programme normally needs all three, and the gaps between them are where disputes live.

Joint names and why it matters

The distinguishing feature of a construction all risks policy is that it is written in joint names. Each insured party has its own interest in the works, and joint names cover prevents the insurer from paying one party and then pursuing another party to the same contract by subrogation. Without it, an employer's insurer that pays for fire damage to the works could recover the loss from the contractor whose operations caused it — which is precisely the outcome the contract's insurance provisions are designed to avoid.

Sub-contractors are commonly brought in by a joint names or waiver-of-subrogation provision rather than being separately named. Whether that has actually been done, and whether it extends to the specific sub-contractors on site, is worth checking rather than assuming.

Existing structures and the JCT options

The hardest question on any refurbishment or extension project is who insures the building that is already there. JCT contracts address this through insurance options: broadly, one option has the contractor take out joint names all risks cover for new works, another has the employer do so, and a third covers works in or extensions to existing structures, where the employer insures both the existing structure and the works in joint names.

Existing structures cover is where projects most often come unstuck. A property owner's normal property insurance may restrict or exclude cover while contract works are in progress, particularly where hot works, scaffolding or structural alteration are involved. The property insurer needs to be told about the project before it starts, and the contract's requirements need to be checked against what the policy actually says — not against what it is assumed to say.

Typical exclusions

Standard CAR exclusions include the cost of rectifying defective workmanship, materials or design in the item that was itself defective (though resulting damage to other parts of the works is usually covered, subject to the defects wording used), wear and tear, penalties for delay, consequential financial loss, and damage arising from work carried out contrary to the specification. Cover for existing structures, works in water, piling, underpinning, and damage to surrounding property from ground movement is frequently restricted or requires specific agreement.

Hot works conditions, security requirements and limits on unattended plant are common warranties and conditions precedent. On a live site these are the provisions most likely to be breached in practice and most likely to be examined after a fire.

Why it matters

Construction risk is concentrated and time-limited: a project spends months with high values on an open site and no completed building to protect them. The insurance provisions are written into the building contract precisely because that exposure has to be allocated before work starts. Arranging cover that matches the contract, in the right names, with the existing structures position resolved, is a pre-commencement task — and it is far cheaper to fix on paper than after an incident.

Frequently asked questions

What does construction all risks insurance cover?

Physical loss or damage to the permanent and temporary works during the construction period, plus unfixed materials and goods on site and, under separate items, plant, tools and site equipment. It usually extends through the defects liability period for damage caused while the contractor is making good.

Why is CAR cover written in joint names?

So that the employer, contractor and sub-contractors are each insured in their own right, and the insurer cannot pay one party and then recover the same loss from another party to the contract by subrogation. Joint names cover is the mechanism the building contract relies on to allocate the risk of damage to the works.

Who insures the existing building on a refurbishment project?

Under a JCT form this depends on the insurance option selected; for works in or extensions to existing structures the employer normally insures both the existing structure and the works in joint names. The existing property insurer must be told about the project, as ordinary property cover can be restricted while contract works are under way.

Does CAR insurance cover defective design or workmanship?

Not the cost of putting right the defective item itself. Resulting damage to other parts of the works may be covered depending on the defects wording used, and design liability is a professional indemnity question rather than a CAR one. Projects with a contractor design element usually need both covers in place.

Related entries

Check the insurance clause before you start on site.

Most construction insurance problems are contract problems found late. We read the contract first. Bristol-based, FCA-regulated.

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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.

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