Exclusions differ from one insurer to another, and checking them is part of our work before we recommend a policy to you.
After heavy rain the excavation floods and the buried foundations have to be redone. A CAR policy covers the reinstatement and the clearance costs, in proportion to the agreed contract value of the works. Without a policy that cost usually stays with the contractor, since the principal pays only the agreed price of the building.
While the structure is being erected, a crane damages the facade and the vehicles of a neighbouring property. The basic CAR cover applies to the works themselves, while damage to third parties is paid only if liability cover has been added. On sites in dense urban areas we therefore always propose both sections in the same policy.
After a production line is installed, a failure during testing damages the equipment. An EAR policy covers the testing phase, but only for the period expressly written into the policy, usually limited to a few weeks. If testing runs longer, the extension has to be notified to the insurer in advance.
The examples are illustrative and show how the cover works in practice.
CAR covers civil works, meaning buildings and infrastructure where the construction element dominates. EAR covers erection works, meaning the installation of machinery, plant and production lines, and it normally includes testing and commissioning. On projects that involve both construction and erection the policy is drafted to include both parts, and the leading class is set according to the larger share of the contract value.
It can be either, and most often both are named in the same policy together with the subcontractors. This is done because after a loss it is frequently unclear who is at fault, so a joint policy removes disputes and recovery claims between the parties. Who pays the premium is settled in the construction contract.
It is the period after handover during which the contractor remains liable for defects. The policy can be extended over that period, either in a version that covers only damage caused while remedying defects, or in a wider version that also covers damage originating in works carried out during construction. The duration is agreed, most often twelve or twenty four months.
The Planning and Construction Act and the tender documents of public contracting authorities regularly require cover for the works under construction and third party liability cover, so in practice you should treat it as mandatory. Without a policy you usually get neither the contract nor approval from the principal. We check the requirements in the tender documents before placing cover, so the policy is not rejected over a formal defect.
The basis is the agreed contract value of the works including materials and equipment built in, and also materials supplied by the principal to the contractor. If the value of the works increases through a variation, the sum insured has to be adjusted, otherwise compensation is reduced proportionally. Items such as site equipment, temporary works and clearance costs are agreed separately.
Send us a short enquiry. We collect offers from every insurer that covers this risk and explain the differences before you sign anything.
