Category: Construction specialty · Reviewed by Taylor Watts, Broker · New Business · Last reviewed 2026-06-05
Contractors All Risks, commonly abbreviated CAR, is the project-specific insurance that covers physical loss of or damage to construction works, plant, equipment and (under standard extensions) the contractor’s liability for personal injury and property damage, throughout the construction period of a specific project.
Category: Construction specialty Also known as: CAR insurance, contractors’ all risks, construction all risks (in some markets, the same product) First codified: Lloyd’s wordings from c.1960s; modern Joint Code of Practice 9 and ABI wordings Related legislation: Construction (Design and Management) Regulations 2015 [1]; Marine Insurance Act 1906 (for marine elements) [2]; Defective Premises Act 1972 [3]
A Contractors All Risks policy is a ‘project policy’ covering one specified construction project from start of works through to practical completion (and, depending on wording, through a defined defects liability period). The cover is taken out by the principal contractor, the employer (developer or building owner), or as a ‘project insurance’ arrangement covering all parties to the project under a single policy [4][5].
The principal sections of a typical CAR policy are:
Section 1 — Physical damage to the works: ‘all risks’ cover for accidental physical loss of or damage to the permanent works (the building or infrastructure being constructed), temporary works (formwork, scaffolding, hoardings), construction materials and (under specific scheduling) the contractor’s plant.
Section 2 — Public liability: third-party legal liability for personal injury and property damage arising from the construction operations, with limits typically £5m–£25m per occurrence for smaller projects, scaling to £50m–£100m or more for larger and more sensitive projects.
Section 3 — Existing structures and surrounding property: cover for physical damage to the employer’s existing structures and adjacent third-party property arising from the construction operations (typically with sub-limits and specific exclusions for the operations causing the damage).
Section 4 — Plant and equipment: separately scheduled cover for the contractor’s plant and equipment.
Section 5 — Advance loss of profits / delay in start-up: separately purchased extension responding to the employer’s loss of expected revenue caused by a physical-damage event delaying practical completion [4][5].
The product is the foundation of construction-phase insurance for nearly all UK building and civil engineering projects, from small refurbishment works to multi-billion-pound infrastructure schemes such as Crossrail (Elizabeth Line), HS2 and major offshore wind installations [4][5].
The construction industry operates under the Construction (Design and Management) Regulations 2015 (CDM 2015), which set out the principal duties of clients, principal designers and principal contractors in respect of safety throughout the construction phase. The HSE is the regulator for CDM and for construction safety generally. CDM 2015 does not specifically mandate insurance but the duties it imposes (and the consequences of breach) form an important part of the underwriting context [1][6].
The Defective Premises Act 1972 imposes a duty on those involved in providing a dwelling to ensure that work is done in a workmanlike or professional manner with proper materials and so that the dwelling will be fit for habitation. The Act has been substantially amended by the Building Safety Act 2022, which extends the limitation period for defective premises claims to 30 years for retrospective claims and 15 years for new claims (depending on the date of completion) [3][7].
Building Safety Act 2022 also created the new building safety regime applicable to higher-risk buildings (defined as residential buildings of 18 metres or 7 storeys or more), with the Building Safety Regulator (a statutory function within HSE) as the principal regulator. The Act materially affects the risk profile of higher-risk building projects and the corresponding CAR cover [7][8].
The Construction Act 1996 (as amended by Part 8 of the Local Democracy, Economic Development and Construction Act 2009) governs construction contracts including payment and adjudication. The Act is the principal statutory framework for the contractual relationships within which CAR policies operate [9].
For projects involving marine elements (port works, offshore installations, marine pipelines), the Marine Insurance Act 1906 may apply to the marine elements of the CAR cover. The principles of insurable interest, fair presentation, warranties and average apply with the modifications introduced by the Insurance Act 2015 [2][10].
A CAR policy is typically arranged at the start of a construction project, often as a condition of the principal contract. The policy is taken out for the construction period (usually from breaking ground to practical completion) with an extension for the defects liability period (typically 12 months from completion). Premium is paid as a single sum at inception or in instalments tied to construction milestones [4][5].
The cover is normally a ‘composite’ or ‘joint names’ policy covering all parties to the project. The standard JCT Design and Build form (and the various NEC engineering contracts) require the contractor to maintain CAR cover in the joint names of the employer and the contractor, with each insured party having the rights of a named insured under the policy. This arrangement avoids subrogation by the insurer against any insured party for losses falling within the cover [4][5].
Underwriters assess CAR risk based on the contract value (which sets the maximum loss exposure), the type of construction (with civil engineering generally lower risk than building works of equivalent value; tunnelling and complex M&E installations higher risk), the location (with sensitive locations such as central London commanding higher premium for surrounding property exposure), the contractor’s experience and claims history, the design risk (with novel designs higher risk than proven methods), and the geotechnical and groundwater conditions. Premium is typically expressed as a rate per £100 of contract value, with rates ranging from £0.05 per £100 for routine commercial building to £0.50 per £100 or more for complex civil works [4][5].
Claims handling involves loss adjusters specialising in construction, working alongside the contractor’s project team, the contract administrator and (often) the employer’s project monitor. Common claims include water damage from rainfall, mains failure or flood; fire damage during hot work; collapse during construction; theft of materials; vehicle and plant damage; and damage to adjacent property from vibration, settlement or impact. Major claims (a building collapse, a major fire, a tunnel collapse) can result in losses of tens or hundreds of millions of pounds and take many years to resolve [4][5].
The terms CAR (Contractors All Risks) and Construction All Risks are used interchangeably in most modern markets, though CAR is more common in London market documentation and Construction All Risks is more common in continental Europe.
CAR insurance is the abbreviated entry for the same product set; this entry is the canonical full treatment.
Erection All Risks (EAR) is the equivalent product for plant and machinery installation projects, used principally for power stations, process plants, factory fit-out and similar erection-focused works.
Owner Controlled Insurance Programmes (OCIP) — also known as wrap-up insurance — are large-project CAR arrangements where the employer (rather than the contractor) procures and controls the CAR programme covering all parties on the project. Used principally for very large projects (HS2, Hinkley Point C, Heathrow expansion).
Project-Specific Professional Indemnity (PSPI): companion product to CAR for professional liability of the design team and consultants on a specific project. Increasingly important in the context of higher-risk buildings and Building Safety Act exposures.
Tunnel construction insurance is a specialist subset of CAR for tunnelling and underground works, with bespoke wording and underwriting.
Latent Defects Insurance / Inherent Defects Insurance: post-construction cover for defects discovered after practical completion, separate from CAR but often arranged in parallel.
A UK construction company is building a new 18-storey office development in central London with a contract value of £85m and a construction period of 24 months. CAR insurance is placed for the full contract value plus £30m for existing structures and surrounding property (reflecting the sensitive location), £25m for public liability and £15m for the contractor’s plant. ALOP cover of £20m is purchased by the developer separately, with a 12-month maximum indemnity period. CAR premium is approximately £180,000 across the construction period. During the policy year, a heavy rainfall event causes water damage to several floors of finished M&E installation, with repair costs of approximately £2.4m. The CAR cover responds, less the policy deductible. Figures in this example are illustrative.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-05. Next review: 2026-12-05.
Apex Insurance Brokers Limited. Authorised and regulated by the Financial Conduct Authority, FRN 724952. Registered in England and Wales, Companies House 07014570. This entry provides general information about UK insurance concepts and is not regulated advice. Consult your insurance broker on your specific position.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
Get a quoteThe mechanics of this term appear in the following Apex guides where they apply directly to a specific profession or commercial sector: