Contractors’ All Risks Insurance

Are you expanding your business with another location or renovating your existing facility? Perhaps you’re adding on additional offices, storage, or warehouse space? Maybe you’re about to break ground on a new home, apartment complex, gated community, condominium development, home renovation plan, or even a roadworks project? If so, you can definitely benefit from the coverage and protection offered by a Contractors’ All Risks policy.

The goal of a Contractors’ All Risks policy is to ensure that all parties are covered against loss on any construction project. The policy can be arranged by the owner of the building/project or the private contractor responsible for the work.

The policy covers the Contract Works (building being erected/renovated/repaired) including all the materials, tools and equipment on the contract site for the purpose of carrying out the contract. This means less worry about site pilfering and missed deadlines due to unforeseen setbacks. It also covers third parties who may become injured while working at the construction site.

Coverage should commence at the start of construction as you are exposed to losses such as theft of materials and liabilities at the construction site from the moment ground is broken. If an existing project is being renovated and is under your care, custody and control, be sure to cover the value of the pre-existing structure in addition to the construction project value.

It is important to note that coverage is based upon the full replacement value of property at the conclusion of the construction project rather than its current value

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Coverage Provided

Contractors’ All Risks Insurance covers loss by any unforeseen and sudden physical damage.

This policy offers comprehensive protection against loss or damage related to the scope of work, the construction plant, tools, equipment and machinery. It also protects against third-party claims related to property damage or bodily injury that might be incurred during the execution of your construction project.

The policy is “All Risks” which means that no specific risks are listed, however it typically protects against fire, theft, water damage, hurricane, flood, wind, and earthquakes. The policy does not cover normal wear and tear, willful negligence or poor workmanship.

The policy can be extended beyond the completion of the construction project to add coverage during a defined maintenance period. This can be applicable while the Contractor is engaged in carrying out remedial work or otherwise fulfilling their contractual obligations.

 Who is covered?

Depending on the type of policy and the party arranging the insurance, coverage can extend to the Contractor, Employer (person for whom the building is being constructed) and any Subcontractors employed by the General Contractor, E.g. Air-conditioning, Plumbing, Tiling and Electrical laborers etc. If you have a loan, the bank or financial institution will insist that you have this type of coverage secured from the onset to protect their interest.

Public Liability Insurance

Accidents can happen at any time during the course of your construction project. Put your protection in our hands. This coverage provides you with a high level of security and protection in the event that there is an accident on the construction site and a settlement has to be paid or legal fees incurred to defend you or your business. With this coverage, you are protected against liability at law to third parties for damages and claimants’ costs and expenses in the event of accidental injury to persons or accidental damage to property. This policy is also available as a stand-alone product outside of a Contractors’ All Risks policy.

Employer’s Liability Insurance  

You provide hard-hats, safety harnesses and goggles because there are many potential dangers lurking on a construction site and you have an obligation to ensure your construction crew is shielded from them. As a responsible employer, your duty is to protect both your employees and your business. This coverage allows you to do both by providing protection in the event an employee sustains bodily injury, or suffers death by accident or disease  during their employment. We will reimburse you  for your legal liability at law to pay compensation for damages and claimants’ costs and expenses

Contractor Performance Insurance Bonds

Large construction projects often require the issuance of a Bond. Although there are many different types of Construction Bonds, the main Insurance Bonds required by Contractors are as follows:

  • Bid Bonds: A Bid Bond is a guaranteed amount that the insurance company agrees in advance to pay on behalf of the contractor should the contractor secure a winning bid for a construction project but defaults in undertaking the project at terms of their bid.
  • Performance Bond: A Performance Bond is a guaranteed amount that the insurance company agrees in advance to pay on behalf of the contractor should the contractor fail to perform or complete a construction project at terms stipulated in the contract.

A Bond is typically for 5% to 10% of the contract project value. Qualifying for a Bond is dependent on satisfactory evaluation of the four (4) C’s:

  1. Character – Is the Contractor experienced in the Industry and maintains a good reputation and standing?
  2. Continuity – Does the Contractor have plans in place for work to continue should key persons leave the business?
  3. Capacity – Does the Contractor have the experience, ability, and “know how” to complete the project?
  4. Capital – Does the Contractor have the financial resources to complete the contract? Normally this is determined by presentation of the latest audited financial statements for the business.

The above is meant to provide general information and general policy descriptions to help you understand the different types of coverage offered. These descriptions do not refer to any specific contracts of insurance and they do not modify any definitions, exclusions or any other provision expressly stated in any contracts of insurance issued by Shield Insurance Agents & Brokers. We encourage you to speak to one of our authorized insurance representatives, and to read your policy contract to fully understand your coverages.