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EAR (Erection All Risks) policy and CAR (Contractor All Risks) policy are both types of engineering insurance, but they differ in coverage. Here is the main difference between contractor all risk and erection all risk policy.
- EAR policy explicitly covers risks associated with the erection, installation, and commissioning of machinery and equipment.
- CAR policy provides broader coverage, encompassing all risks associated with the entire construction project, including material damage and third-party liability.
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The benefits of a Contractor All Risk Policy include:
- Comprehensive coverage for construction project risks.
- Protection against financial losses from damage and liabilities.
- Ensures project continuity and credibility.
- Mitigates financial risks and unexpected expenses
- Provides peace of mind for contractors, developers, and project owners.
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An insured must contact the insurance company immediately after the accident. However, if you have purchased the Contractors All Risk Insurance via Policybazaar for Business, then you must inform your relationship manager immediately after the incident.
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Project insurance, also known as Construction Insurance, is a type of insurance policy designed specifically for construction projects. It provides comprehensive coverage against a wide range of risks that may arise during the construction process.
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The declaration of projects involves specifying and listing the individual construction projects or contracts covered by the policy. This declaration is necessary as it outlines the scope and extent of the insurance coverage provided for each specific project.
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The Bill of Quantities (BoQ) is an essential document that details the specifics of a construction project. It provides a comprehensive list of the work, materials, and costs necessary to complete the project. The BoQ includes the following elements:
- Description of work
- Quantity of each item
- Unit rate
- Total value or cost of each item
- Project breakdown
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The fire equipment clause outlines the requirements and conditions for fire-fighting equipment at the construction site. It ensures that proper fire prevention and protection measures are implemented to reduce the risk of fire-related losses.
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In a Construction All Risk policy/ CAR Policy, a Vitiating Act refers to an action or omission by the insured (or sometimes by other parties involved in the project) that can invalidate the insurance policy or decrease the insurer's liability under the policy.
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Under a CAR policy, a sole arbitrator is an individual designated to settle disputes between the insured party and the insurer.
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The Reinstatement of Indemnity Limit in a Construction All Risk (CAR) policy permits the insured to reinstate the entire coverage limit following the settlement of a partial loss or claim.
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The insurance policies that are required during construction are:
- Construction Insurance: For covering property damage and third-party liability, ensuring protection against accidents, theft, fire, and natural disasters during construction.
- Workmen Compensation Insurance: For safeguarding your workers against injuries or illnesses sustained while on the job, covering medical expenses and lost wages.
- Marine insurance: For transporting construction material from one place to another, protecting against losses or damages during transit.
- General Liability Insurance: For protection against third-party bodily injury, property damage, and accidents on the construction site.
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This policy is typically taken by:
- Construction Contractors
- Project Owners
- Subcontractors
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A Contractors All Risk policy can be purchased by contractors, project owners, developers, builders, EPC contractors, subcontractors, and joint venture entities involved in construction projects.
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A CAR policy generally covers physical loss or damage to contract works, construction materials, plant and machinery at the site, and third-party liability arising from construction activities, subject to policy terms and conditions.
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Yes, Contractors All Risk Insurance usually covers losses arising from natural calamities such as fire, storm, flood, cyclone, earthquake, landslide, and lightning, unless specifically excluded in the policy wording.
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Yes, most CAR policies include third-party liability cover, which protects against legal liability for bodily injury or property damage caused to third parties during the construction period
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Coverage under a CAR policy generally begins from the commencement of construction and continues until project completion. It may also include a maintenance or defects liability period, depending on the policy terms.
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Construction materials stored at the insured project site are typically covered. Coverage for off-site storage or transit may require additional extensions or separate insurance.
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Common exclusions include normal wear and tear, poor workmanship (though resulting damage may be covered), wilful negligence, contractual penalties, war, nuclear risks, and pre-existing damage.
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The sum insured usually equals the total contract value, including material costs, labour, machinery, and escalation provisions, as declared by the insured at policy inception.
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While not universally mandatory by law, CAR insurance is often required by project owners, lenders, or government authorities to protect financial interests.
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The premium depends on factors such as project value, nature of construction, location, duration, construction methods, claims history, and risk exposure at the site.
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Yes, the policy period can be extended subject to insurer approval, additional premium, and reassessment of project risk.
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Unless the policy includes a reinstatement clause, coverage may be reduced after claim settlement. With reinstatement, the insured can restore the original sum insured by paying an additional premium.
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Construction plant and machinery at the site may be covered for accidental damage, but breakdown due to internal defects may require a separate machinery breakdown policy.
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CAR insurance protects construction stakeholders from financial losses due to unforeseen damage, accidents, or liabilities, ensuring project continuity and financial stability.
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Third-party liability under a Contractors All Risk (CAR) policy covers legal liability arising from accidental bodily injury or property damage caused to third parties during construction activities.
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