Contractors’ All Risks Insurance in the UAE

Contractors’ All Risks Insurance, commonly known as CAR Insurance, is intended for building and civil-engineering projects. It may cover eligible sudden and accidental physical loss or damage to the insured contract works during construction, subject to the issued policy wording, schedule, limits, deductibles, conditions and exclusions.

The policy may include the project principal, main contractor, subcontractors and other parties with an insurable interest when they are declared and accepted by the insurer. The project description, contract value, location, construction period and responsibilities of each insured party should be accurately disclosed.

What Contractors’ All Risks Insurance May Cover

Material-damage cover may apply to eligible physical loss or damage involving:

1. Contract works: Permanent and temporary construction works included within the declared contract value.
2. Construction materials: Materials intended to form part of the project while at the insured site.
3. Temporary structures: Site offices, scaffolding, formwork or similar items when declared and included.
4. Construction activities: Eligible damage occurring while building, altering, extending or completing the insured project.

Events such as fire, accidental impact, theft, storm, flood or other natural hazards are not automatically insured merely because the product is described as “all risks”. Cover applies only when the event falls within the issued wording and is not excluded.

Optional Third-Party Liability Cover

Third-party liability is separate from material-damage cover. When requested, accepted and expressly included, it may cover the insured’s applicable legal liability for accidental bodily injury to third parties or accidental damage to third-party property arising directly from the insured construction activities.

This section remains subject to its own limits, deductibles and exclusions. Employee injuries, professional design liability, motor liability and damage to property owned, occupied or controlled by the insured may require separate insurance or specific extensions.

Who May Need CAR Insurance?

CAR Insurance may be relevant to:

1. Project owners and developers.
2. Main building and civil-engineering contractors.
3. Subcontractors working on an insured project.
4. Financiers or lenders with an insurable interest.
5. Parties required to arrange project insurance under a contract or tender.

CAR Insurance is not necessarily compulsory for every construction project in the UAE. However, it may be required by a project contract, tender, client, lender, government authority, free zone or other relevant party.

Important Policy Conditions

1. Construction period: Cover normally applies only during the dates stated in the policy. Extensions should be requested before expiry.
2. Contract value: The insured value should reflect the full declared project value and other agreed components.
3. Project changes: Changes to the design, scope, value, location, timeline or construction method should be disclosed to the insurer.
4. Safety measures: Required site-security, fire-protection, excavation, dewatering and loss-prevention measures should be maintained.
5. Testing: Any testing or commissioning activities should be declared and included where relevant to the project.
6. Maintenance period: Limited cover after project completion may apply only when a maintenance-period extension is included.

Construction Plant and Machinery

Cranes, excavators, loaders, generators and other contractor-owned or hired machinery are not automatically covered as contract works under every CAR policy. Such equipment may require separate Contractors’ Plant and Machinery Insurance.

Small tools, employee belongings, road-registered vehicles, aircraft, watercraft and other property may also be excluded unless specifically declared and accepted.

Optional Extensions

Depending on the project and underwriting acceptance, extensions may be considered for existing property, surrounding property, debris removal, professional fees, escalation, inland transit, temporary storage or additional customs duties.

These items are not automatically included. Each extension may have a separate limit, deductible, territorial scope and set of conditions.

Common Exclusions and Limitations

CAR policies commonly exclude or restrict losses involving:

1. Wear and tear: Gradual deterioration, corrosion, erosion or lack of maintenance.
2. Defective work: Costs associated with faulty design, defective materials or defective workmanship may be excluded or limited.
3. Consequential loss: Loss of profit, loss of use, penalties, contractual delay or loss of market.
4. Existing damage: Damage or defects known before the policy started.
5. Excluded events: War, nuclear risks, deliberate acts, confiscation and other events excluded by the policy.

Depending on the defective-work exclusion used, the cost of correcting the defective item may be excluded while resulting accidental damage to other insured property may be treated differently. The issued wording and endorsements should therefore be reviewed carefully.

Delay in project completion, delayed revenue and loss of anticipated profit are not automatically covered under standard CAR material-damage insurance. These exposures may require separate Advance Loss of Profits Insurance or Delay in Start-Up Insurance.

What to Do After an Incident

1. Protect people at the site and contact emergency services where necessary.
2. Take reasonable steps to prevent further physical damage.
3. Notify Al Buhaira Insurance as soon as reasonably possible.
4. Report theft or malicious damage to the police.
5. Preserve damaged property unless removal is necessary for safety.
6. Keep photographs, reports, invoices and relevant project records.
7. Do not admit third-party liability or agree to a settlement without approval.

How to Request a Quotation

Businesses can submit initial project details through Al Buhaira Insurance’s dedicated Contractors’ All Risks quotation page. The quotation assessment may consider the project type, contract value, construction period, location, construction methods, surrounding property, parties to be insured, liability requirements and previous claims.

A quotation does not confirm that insurance cover has started. Cover begins only after the required information has been reviewed, the offered terms have been accepted and the applicable policy documents have been issued.

Documents Required

The insurer may request documents and information such as:

1. Completed proposal or quotation form
2. Trade licence and company details
3. Construction contract or project agreement
4. Project description and scope of work
5. Contract value and bill of quantities
6. Site location and layout
7. Project programme and construction timeline
8. Construction methods and method statements
9. Principal, contractor and subcontractor details
10. Details of excavation, piling or temporary works
11. Testing and commissioning information
12. Surrounding and existing property details
13. Required third-party liability limits
14. Previous insurance details and claims history
15. Principal, client or lender insurance requirements

Why Choose Al Buhaira Insurance?

1. Engineering insurance range: Contractors’ All Risks Insurance is available within Al Buhaira Insurance’s engineering insurance products.
2. Dedicated quotation page: Businesses can submit initial company and project information online.
3. Project-based assessment: Quotations can consider the declared works, contract value, project period, activities and requested limits.
4. Policy enquiries: Customers may contact Al Buhaira Insurance regarding issued schedules, conditions, deductibles and endorsements.
5. Claims enquiries: Policyholders can report incidents and provide supporting documents for assessment under the issued policy.

Frequently Asked Questions