Contractors' All Risks (CAR) insurance is a property insurance by which any building or civil engineering project under construction is protected against accidents resulting in physical damage to or the destruction of works in progress, materials and other similar items brought to the site.
This policy provides cover for those who have an immediate material interest in a project. These are the Principal (employer), the Contractor and usually all sub-contractors, often including suppliers of materials and equipment.
However, professionals such as Consulting Engineers and Architects are excluded from cover because the CAR policy excludes losses or damages arising from defective workmanship or materials, design, plan and specifications.
Construction All Risks insurance is essentially a combination of insurances covering the temporary and permanent works (of the project), tools, equipment and construction machinery of the insured against any unforeseen and sudden physical loss or damage from any cause whatsoever, other than those specifically excluded. The insurance also includes a Third Party Liability cover against legal liability for damages as a consequence of the performance of the contract.