Contractor's All Risk Insurance policy (CAR)
As the name indicates, the Contractors All Risks (CAR) Insurance offers complete protection and coverage over losses and damages caused in all types of civil construction projects. This CAR policy can be taken by the Principal, Contractor, or sub-contractor, either individually or jointly like consulting engineers, architects, and financiers because it reduces overall building costs while also providing effective financial protection for all parties involved.
Physical loss or damage to property is covered on an “All Risks” basis, which means that the policy covers damage to property during construction from all harsh, unintentional, and accidental causes other than those specified excluded perils.
Coverage Options & Non-Coverage Options in CAR policy
Coverage Options
Civil construction such as residential buildings,commercial buildings,factory sheds, warehouses, Pipelines, dams, reservoirs, etc.
Non-Coverage Options
War and nuclear group of perils
Air Freight & Escalation
Loss discovered at time of taking inventory
Express Freight, holiday and overtime rates of wages
Normal wear and tear; Gradual deterioration due to atmospheric conditions or otherwise, rust
Additional Customs duty
Partial/Total Cessation of work
Contractors Plant & Machinery up to specified limits
Loss or damage due to faulty design
Clearance and removal of debris
Penalties for non-fulfillment of contractual obligations
Storage risk at fabricators premises
Damage to files, drawings, accounts and bills etc
Third-party & Cross liability
Consequential losses
Erection All Risk Insurance
Erection All Risks (EAR) insurance offers coverage and protection to principles, contractors, sub-contractors, manufacturers, and suppliers erecting machinery and plants, etc either separately or together. over the economic loss due to any sudden fortunate and unexpected causes resulting in loss or damage to the property insured at the project site while being stored, pitched, tested, and commissioned.
Coverage Options & Non-Coverage Options in EAR policy
Coverage Options
Fire, lightning, explosion/implosion, aircraft damage.
Non-Coverage Options
War and nuclear group of perils
Construction machinery plants and equipment
Willful act / negligence
Air Freight & Escalation
Loss discovered at time of taking inventory
Theft, burglary, Riots Strikes and Malicious Damage.
Normal wear and tear; Gradual deterioration due to atmospheric conditions or otherwise, rust
Flood, storm, landslide, Earthquake and Terrorism
Cost of rectification or correction of any error during erection not resulting in physical loss or damage
Storage risk at fabricators premises
Scratching of painted or polished surface, breakage of glass
Express freight, holiday and overtime rates of the wages
Consequential losses & Aesthetic defects
Clearance and removal of debris
Damage to files, drawings, accounts and bills etc
Third-party & Cross liability and Surrounding property of the insured
Penalties for non-fulfillment of contractual obligations
Electrical/Mechanical breakdown during installation or testing
Costs of any alterations, additions and/or improvements after a claim
Additional Customs duty
Operational deficiencies
Theft, burglary, Riots Strikes and Malicious Damage
Contractor’s Plant and Machinery loss or damage by its own explosion/mechanical electrical breakdown/derangement
The details furnished above do not constitute the entire coverage, exclusions, terms and conditions. For full details please refer to our Policy document.
Construction / Erection Projects: ALOP Insurance in Engineering
This policy covers loss of Gross profit suffered during the period of delay in commissioning of project arising out of loss/ incidents affecting the progress of project work provided all or any one accident occur during the project period & is admissible under EAR / CAR policy terms. That means we pay for the loss of the Anticipated Gross profit during the delay period starting from the scheduled date of commissioning till the actual commissioning of the project.
Coverage Options & Non-Coverage Options in ALOP policy
Coverage Options
The ALOP policy is mainly given to PRINCIPAL
Non-Coverage Options
Loss / Damage due to Inventory Losses
Concurrent material damage ( MD ) insurance
Loss / Damage to Surrounding Property, Contractors Plant & Equipment
Same insurer(s) for ALOP and MD
Restrictions imposed by Public Authority
Insurance period identical to MD erection period
Non Availability of funds for repairs/replacement to damaged items
Accidents not immediately followed by indemnity period
Delay in shipments of supplies
Only one claim per policy irrespective of no. of accidents.
Normal Project schedule slippage
Only one Time Excess per policy
Cancellation of license or Govt. restrictions
Indemnity period should be sufficiently long to take care of maximum delay that can occur due to a worst possible accident during the Transit or Construction phase.
Stoppage of work/Strike interference.
Advice to clients for ALOP/ DSU Insurance
- Marine transit cover for critical supplies must be taken in addition to EAR policy.
- An indemnity period should be selected considering the duration of the project and lead time in the supply of critical parts for repairs of damaged machinery. The unexpected delay in the supply of parts should also be kept in mind.
- Sum insured must represent anticipated gross profit for the selected indemnity period to avoid the application of underinsurance In the event of a claim.
- Loss minimization expenses are payable under ALOP subject to the maximum of anticipated loss representing the period of delay saved.
- ALOP period must also be extended whenever an extension is sought in MD policy.
- Sum Insured of the policy should be Anticipated Annual G.P.which is likely to be generated in the 12 months period after the scheduled start of the project.
Anticipated Gross Profit = Anticipated N.P. + Insured.
Standing charges :
This can be obtained from the Project report submitted to Financers showing anticipated profits likely to be generated once the project is finally tested, commissioned & becomes operational.
Various causes for Delay in Project COD
- Design related delays
- Construction-related delays
- Finance related delays
- Management/administrative related delays
- Lack of Supplies
- Authority Restrictions
- Land acquisition problems
- Weather
- An unforeseen event,Accidents
- Catastrophe
- Actual delay can be seen from the ‘S’ curve

MACHINERY BREAKDOWN INSURANCE POLICY
Machinery Breakdown policy is an ideal cover for all kinds of plant and machinery, to cover cost of repairs or replacement of damaged parts as a result of unforeseen and sudden physical damages.
WHAT IS EXCLUDED
The perils of fire, explosion, earth movement, water (i.e., flood), lightning, windstorm/hail, collision with a vehicle, riot/civil commotion, sprinkler leakage, and volcanic action are specifically excluded in the HSB policy as coverage should be provided in the property policy.
What is the sum insured under MBD policy?
It is a requirement of this Insurance that the Sum Insured shall be equal to the cost of replacement of the insured property by new property of the same kind and same capacity which shall mean its replacement cost including freight and customs duties, if any, and erection costs.
Machinery loss of profits (MLOP) insurance
MLOP insurance indemnifies the actual loss of gross profit sustained as a result of a business interruption caused by an accident covered under machinery insurance.
What is machinery loss of profit?
Machinery loss of profit covers consequential loss as an inevitable consequence of accidental breakdown of any machinery. Covers consequential loss due to accidental breakdown of any machinery. It covers loss of gross profit and/or increase in cost of working due to reduction in Turnover/Output.
What is CPM policy?
CPM policy is mainly designed to protect the interest of civil contractors owning Contractor’s Plant & Machinery Policy so as to ensure that their equipments are well covered against the damage or destruction related to various civil engineering projects.
What is Electronic Equipment Insurance (EEI) policy?
EEI Policy protects the Owner, Lessor or Hirer (where responsible either legally or through a leasing agreement) of electronic equipments. EEI Policy is Suitable for all electronic equipments (some examples): • Computer and allied peripherals. • Auxilliary equipments like UPS, Voltage Stabilizer etc.
Boiler & Pressure Plant Insurance Policy
Boiler and Pressure Plant Insurance covers damage to boilers & pressure plant with damage to surrounding property and Third Party legal liability arising due to explosion and collapse of the boiler/ pressure plant during its normal course of working.
What is not covered under the boiler policy?
This policy does not cover damage due to: Fire and related perils. War and nuclear perils. Overload experiments / tests imposing abnormal conditions.