What is Contractors All Risk Insurance?
Quick Answer: Contractors All Risk insurance in construction projects protects both the contractor and project owner from loss due to on-site accidents, damages, or third-party claims.
As contractors who’ve handled dozens of residential and commercial projects through Archiconnect, we know that construction sites come with risks — from material theft to accidents that damage nearby property.
That’s why Contractors All Risk (CAR) Insurance is a must-have. It provides coverage for accidental physical loss or damage to the work while it’s being built, plus any third-party liability claims that may arise.
We often say this to new clients: Building without risk coverage is like driving without brakes — you may move fast, but a crash could cost everything.
What Is Contractors All Risk (CAR) Insurance?
Short Answer: CAR insurance is a type of construction insurance that covers physical damage to the site and third-party liabilities during a project.
Now, let’s break it down. The term “All Risk” means most kinds of accidental damage are covered — unless the policy clearly says otherwise (that’s what we call exclusions). This makes CAR insurance flexible and powerful.
Key Points:
- Covers the construction site, materials, labor, and more
- Protects against accidents — fire, theft, storm, collapse, etc.
- Also shields contractors from legal claims due to injury or damage
It’s commonly tailored to each project, which helps a lot if you're handling multiple jobs at once — something we’ve seen with many local firms here in Bangladesh.
Key Components of a CAR Insurance Policy
What does Contractors All Risk insurance cover?
CAR Insurance has two major parts, and both are equally important:
Material Damage (Section I)
This covers:
- Permanent and temporary works (e.g., buildings, scaffolding)
- Construction materials (on-site, in storage, even in transit)
- Losses from:
Fire Flood Theft or vandalism Wind/storm damage Accidental collapse
- Debris removal and professional reinstatement fees
This is project-specific coverage, so you can include exactly what’s needed.
Third-Party Liability (Section II)
This protects you if your work accidentally causes injury or damage to others.
- Covers injury to the public or damage to nearby property
- Pays for legal claims and defense
- Example: A brick falls off scaffolding and breaks a neighbor’s window — CAR insurance can help cover that cost.
Real Scenario: On one of our Dhaka builds, scaffolding gave way in heavy rain and damaged parked vehicles. Thankfully, the contractor had CAR coverage — and the insurer paid out for third-party claims.
Who Needs Contractors All Risk Insurance?
Short Answer: Anyone involved in construction projects — for risk and legal protection.
In Bangladesh, we often work with the following professionals who either request or require CAR insurance:
- Project Owners & Developers
- Main Contractors (like us)
- Subcontractors (plumbers, electricians, carpenters)
- Bank Lenders or Investors
- Architects & Site Engineers (depending on the project size)
From bridges to bungalows, most large projects need proof of CAR insurance before breaking ground.
From experience: Whether it’s a 5-story apartment in Mirpur or a duplex in Bashundhara, we’ve rarely seen site work begin without this coverage.
Common Risks and Scenarios Covered
Let’s talk about how this works on real jobs. CAR insurance usually handles:
- Damage from accidental collapse during foundation digging
- Theft of high-value equipment (generators, cement mixers)
- Flood or storm damage to partly finished buildings
- Third-party injury (like a bystander harmed by falling material)
Not Covered Unless Added:
- Design errors
- Bad workmanship
- Cost overruns from delays
Tip: Always ask your insurer what’s included — surprises can be expensive.
What is Not Covered (Common Exclusions)
CAR insurance exclusions to watch out for:
- Faulty design or poor construction work (Get Professional Indemnity Insurance for that)
- Normal wear and tear, rust, or corrosion
- Delays and losses from missed timelines
- War, terrorism, and nuclear events
- Injuries to workers (Covered under worker compensation insurance)
Advice from our team: Always review the fine print before buying a CAR policy. A good contractor knows what’s covered — a great one knows what’s not.
Cost of Contractors All Risk Insurance
Short Answer: There's no fixed price — it depends on your project.
What affects pricing:
- Total project cost
- Project length (3 months vs 1 year makes a difference)
- Type of work: Is it a high-rise in Dhaka, or a cottage in Cox’s Bazar?
- Risk level of the location (flood-prone, etc.)
- Coverage limits and add-ons
- Contractor's past safety record
Smart Tip: Get 2–3 quotes and don’t just pick the lowest — choose the policy with better inclusion and real claim support.
When and How to Get Contractors All Risk Insurance
Short Answer: Get it BEFORE work starts.
We help our clients get CAR insurance at the planning stage, often after:
- Budget is finalized
- Construction design is ready
- Contractor bids are submitted
- Bank or customer requests proof of insurance
Steps to apply:
- Estimate total project cost and risks
- Contact an insurance broker or licensed provider
- Provide basic documents (plan, BOQ, safety measures)
- Customize your policy (single project or yearly multi-project)
Handling more than 3 small projects in a year? Go for an annual plan to cut costs.
Why Contractors Should Prioritize CAR Insurance
Let’s be honest: accidents happen. And Bangladesh’s site risks — weather, theft, human error — can be brutal. CAR insurance helps avoid financial disaster.
Here’s why we always recommend it:
- Saves your investment from being wiped out
- Keeps the project running even after damage
- Builds client trust
- Shows you’re a professional contractor, not a weekend builder
At Archiconnect, we don’t quote jobs unless the risk protection plan is clear. Our job’s not just to build — it’s to finish strong, even if things go wrong.
Conclusion
Contractors All Risk insurance isn’t just a formality — it’s your project’s safety net.
Whether you’re building a single house or managing a large commercial site, having the right insurance can mean the difference between delay and disaster. We've seen it ourselves — and always recommend responsible contracting with the right protections in place.
FAQ: Contractors All Risk Insurance (CAR)
Q: What does Contractors All Risk insurance cover?
A: Site damage, construction materials, third-party injury or property damage.
Q: Who needs CAR insurance in construction?
A: Contractors, developers, subcontractors, architects, and anyone investing in the build.
Q: Is CAR insurance mandatory for contractors?
A: Often yes — most large projects (especially bank-funded) require it.
Q: What factors affect the cost of CAR insurance?
A: Project value, timeline, site risk, construction type, and contractor safety history.
Q: How do I apply for a CAR insurance policy?
A: Contact a provider, submit project info, pick coverage, and finalize it before site work starts.
Q: What does "all risk" insurance cover?
A: All accidental damages not specifically excluded in the policy.
Q: What's the best insurance for contractors?
A: CAR insurance, combined with Professional Indemnity and Worker Liability Insurance.
Q: What is covered under property all risk insurance?
A: Like CAR, it covers unexpected damage to property — but mainly for completed buildings, not construction.
