Contractor's all risk insurance ensures financial security against project delays or damages

What is Contractor's all risk insurance?

Contractor's all risk insurance is designed to protect contractors from the financial risks associated with construction projects. It covers loss or damage to property, machinery, and materials used in projects resulting from various unforeseen events, such as accidents, natural disasters and theft. Additionally, many Contractor's all risk insurance policies also provide coverage for third-party liabilities, such as accidents that cause injury or damage to another person’s property during the project.

With this policy in place, you can focus on completing the job without worrying about the unforeseen financial burdens caused by costly damages or delays. The policy is like a safety net that can help keep your business running smoothly, even when the unexpected happens.

Contractor's all risk insurance – inclusions

A Contractor's all risk insurance policy typically covers the following:

•   Location-based risks: These include risks due to fire, lightning, burglary, theft and housebreaking
•   Risks during testing and commissioning: Potential issues like failure of safety devices, short circuits, electric leakage, insulation failure and even explosions
•   Natural disasters: The policy may cover events such as storms, floods, hurricanes, landslides, rockslides, earthquakes and other extreme weather conditions
•   Handling-related risks: Accidents from collisions, falling objects and failure of lifting equipment and cranes
•   Human element risk: Problems caused by negligence, carelessness, errors in construction, strikes, riots, etc.

Contractor's all risk insurance – exclusions

A Contractor's all risk insurance policy does not cover losses arising out of the following events:

•   War and allied risks
•   Wilful actions or negligence by the insured or their representatives
•   Normal wear and tear, gradual deterioration, rust and similar issues
•   Suspension of work
•   Damages or penalties arising from the insured’s failure to meet delivery/completion terms in their construction contract
•   Nuclear and associated risks
•   Losses identified only during inventory checks
•   Loss or damage due to defective materials, faulty design or casting issues, excluding faults during installation
•   Consequential losses or liabilities of any kind

How Contractor's all risk insurance safeguards you

Here’s how Contractor's all risk insurance safeguards you from financial loss due to delays and damages:

1. Effective risk management: Construction projects are inherently exposed to numerous unpredictable risks, including thefts, accidents, natural disasters and property damage. A Contractor's all risk insurance policy provides comprehensive coverage, shielding you from these unforeseen events and preventing potential financial hardship when things go wrong.
2. Financial protection: Construction projects typically require significant financial investments in materials, equipment, labour, transportation, safety measures, and more. A Contractor's all risk insurance policy helps safeguard these investments by covering repair or replacement costs in the event of damage, thereby reducing potential financial impact.
3. Keeps your project moving forward: When the unexpected happens, such as property damage or project delays, Contractor's all risk insurance ensures that your work doesn’t come to a halt. With this policy in place, you can keep things on track and avoid costly delays.
4. Third-party liability protection: Construction sites can sometimes be risky for others, like neighbouring buildings or people passing by. With Contractor's all risk insurance, you are covered for any third-party claims, so you don’t have to worry about legal fees or other expenses that could come up.
5. Peace of mind: Having Contractor's all risk insurance lets you focus on getting the job done without constantly worrying about what could go wrong. Knowing you are financially protected gives you peace of mind while executing your project rather than stressing over potential risks.
6. Strengthens your reputation: When you have Contractor's all risk insurance, it shows that you are serious about managing risks and taking responsibility for your work. This can help boost your reputation in the industry, making you more attractive to potential clients or investors looking for reliable partners.

Conclusion

The contractor’s all risk policy provides assurance, knowing you are financially protected against potential project delays and other issues. From thefts and accidents to weather-related setbacks and property damage, the insurance shields you from financial strain, ensuring that repairs and replacements don’t derail your project. It serves as a crucial safety net that keeps you prepared for any challenges or obstacles that may arise. Staying covered under Contractor's all risk insurance helps you move forward with confidence, maintaining both the project’s timeline and your financial stability.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It is advised to verify the currency and relevance of the data and information before taking any major steps. Please read the sales brochure / policy wordings carefully for detailed information about on risk factors, terms, conditions and exclusions. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.