Understanding Contractors’ All Risks (CAR) Insurance: a broker’s perspective
As a broker at Sovereign Insurance Services, I’ve seen firsthand the importance of Contractors’ All Risks (CAR) insurance in protecting construction and civil engineering projects from unforeseen risks. Gibraltar’s unique landscape, regulatory framework and infrastructure developments make CAR insurance an essential safeguard for contractors, developers and other stakeholders in the industry.
What is CAR insurance?
CAR insurance is a comprehensive policy that covers property damage and third-party claims for injury or damage. during construction projects. It typically protects against risks such as fire, theft, vandalism, natural disasters and accidental damage during the course of a build.
CAR insurance consolidates these varied coverages into a single, cohesive policy, effectively eliminating gaps that could occur if separate policies were relied upon. This coverage ensures that delays, financial losses and legal liabilities can be mitigated, allowing construction projects to proceed smoothly.
Why is CAR insurance essential in Gibraltar?
Gibraltar may be a safe place generally, but its dense urban environment and ongoing infrastructure developments create various risk exposures for construction projects. Space constraints, challenging terrain and proximity to existing structures heighten the need for robust insurance coverage.
Additionally, regulatory requirements necessitate that contractors take adequate precautions to protect their projects and the surrounding environment, reinforcing the need for proper insurance coverage.
Real-life claims scenarios in Gibraltar
To highlight the importance of CAR insurance in protecting projects from unexpected events beyond a contractor’s control, here are three claim scenarios based on recent incidents in Gibraltar:
- Damage to a nearby structure during excavation – a construction project in a busy area of Gibraltar accidentally caused significant damage to an adjacent building during excavations. The instability led to structural reinforcements being required and legal action was taken by the affected property owners. CAR insurance was in place to help cover the costs of repairs and legal liabilities, preventing severe financial losses.
- Severe weather impacting a construction site – a sudden storm with high winds and heavy rain caused scaffolding and construction materials to collapse onto a nearby road. This resulted in project delays and damage to partially completed structures. CAR insurance was in place to cover the cost of repairs and additional expenses related to the delay, ensuring work could resume promptly.
- Arson at an unoccupied supermarket – a fire broke out in an empty supermarket due to suspected arson. Had the building been under construction at the time, the developer’s CAR insurance policy would have covered the damage, including structural repairs and additional costs arising from the incident.
Choosing the right CAR insurance policy
The inherently unpredictable nature of the construction industry makes CAR insurance an indispensable safety net for developers, contractors and all other stakeholders involved in a project. By offering protection against potentially costly disruptions, CAR insurance not only mitigates financial risks but also fosters trust and collaboration among all parties.
Not all CAR policies are the same. It is essential to work with an experienced broker who understands the complexities of construction risks in Gibraltar. At Sovereign Insurance Services, we tailor policies to meet the specific needs of each project, ensuring comprehensive coverage and peace of mind for our clients.
If you’d like to discuss CAR insurance for your next construction project, please contact us today to find the right coverage tailored to your needs.
