Contractor’s All Risks Insurance
Contractor’s All Risks Insurance is something that everyone involved in the construction industry needs to have. As well as being essential for general building contractors, it is also something that should be considered by the ancillary trades, such as electricians, plumbers, carpenters and joiners, double glazing installers, and heating and ventilation contractors.
This type of insurance is usually bought on an annual basis to cover all of the work that a contractor will do throughout the year, although it can also be bought on a short term basis to cover single projects. It is usually more cost-effective to buy it on an annual basis. For this reason, Contractor’s All Risks Insurance is only bought to cover a single project when the project involved is a major undertaking.
The premium for Contractor’s All Risks Insurance is based on the contractor’s annual turnover although the policy limits required and insurance policy excess level will have an impact on how much is charged. If you have had any previous Contractor’s All Risks Insurance claims, the number of those claims and the amounts involved will also make a difference to the premium that you will be required to pay.
What does it cover?
The main thing that Contractor’s All Risks Insurance covers is the contract works, and this is why this type of insurance is often referred to as Contract Works Insurance.
When the insurance policy talks about the “contract works” it means the work that you are carrying out. It is important to note that there is no cover for the existing structure. As an example, if you are adding a conservatory to a private house, the conservatory would be the “contract works” but the existing private house would not be covered.
The insurance policy covers loss of or damage to the contract works. This will include losses due to fire, storm and the like. However, some causes of loss are excluded so it is important to check your insurance policy to check what is actually covered.
What else is covered?
As well as covering the contract works, Contractor’s All Risks Insurance usually covers a number of other things.
First, loss of or damage to construction plant, tools and equipment that you are using will be covered. You will also be covered for loss of or damage to temporary buildings such as any site huts that you are using, as well as their fixtures and fittings.
The cover is not normally restricted to plant, tools and equipment that you own. A standard Contractor’s All Risk Insurance policy will cover hired-in plant, tools and equipment as well.
And you will generally be covered for any ongoing hire charges that you have to pay in the event of anything hired-in being lost or damaged. This is important because if you have hired in an item of plant for the duration of the contract, you may still be responsible to continue paying the hire charges even if that item of plant is stolen at some point.
Building materials and components are also covered. This includes building materials and components that are on site waiting to be installed as well as building materials and components that in transit on their way to the job site.
What doesn’t it cover?
As with all insurance, Contractor’s All Risks Insurance has its limitations, despite the fact that it has “all risks” in its name.
Existing structures are not covered, although there should already be an insurance policy in place that is covering those. The insurance company that is covering the existing structure should continue to insure it while the work is taking place, but it is important to tell that insurance company about the work that is planned before it commences.
Third parties and their property aren’t covered, either. Contractors need to have Public Liability Insurance to deal with claims made against them by third parties while they are carrying out the work. Often Public Liability Insurance and Contractor’s All Risks Insurance are sold together as part of a combined package insurance policy specifically aimed at contractors.
Finally, there is usually an excess which means that you have to pay the first part of any claim made under the Contractor’s All Risks Insurance policy. Clearly nobody likes having to pay an insurance excess in the event of them having to make a claim, but the excess results in the premium for the insurance policy being cheaper. Opting for a higher excess than the standard excess can result in meaningful premium discounts.