Engineering & Project Insurance
A construction site is a property risk that changes every week. Engineering policies are written around the project rather than the premises, and they usually run for the life of the contract rather than for a year.
Placed by Naveen Kumar Pandey, IRDAI-licensed insurance agentNo consultation fee
What this actually is
Contractor's All Risk covers civil construction works — buildings, roads, bridges — against accidental physical loss or damage during the construction period, together with third-party liability arising from the site. Cover runs from the start of work to handover, and can extend into a maintenance period afterwards.
Erection All Risk does the same job for the installation and testing of plant and machinery, which is where a large share of erection losses actually occur. The testing and commissioning phase is the highest-risk part, and how long it is covered for is a point to check carefully.
Contractor's plant and machinery covers the equipment itself — excavators, cranes, mixers — whether working, at rest or being moved between sites. It is separate from the works cover.
The sum insured is normally the completed contract value including materials, freight, duties and erection costs. Getting that figure right matters as much here as anywhere else, because the average clause applies just the same.
Key facts
- Our appointment
- Bajaj Allianz General Insurance, agency code BAG10104147
- CAR
- Civil construction works, plus site third-party liability
- EAR
- Erection, installation, testing and commissioning of plant and machinery
- CPM
- Contractor's plant and machinery, on site, at rest or in transit
- Policy period
- The project period, not a calendar year; extendable for maintenance
- Sum insured basis
- Completed contract value including materials, freight, duties and erection
This suits you if
- Civil contractors and builders
- Companies installing plant, machinery or equipment
- Project owners and principals
- Equipment owners hiring plant out to sites
- Any contract where the client requires CAR or EAR cover
How it works, step by step
Set the project sum insured
Full completed contract value including materials, freight, duties and erection cost — not just the labour component.
Match the period to the contract
Cover must span the whole construction period, plus testing and any maintenance period.
Add the right extensions
Surrounding property, debris removal, professional fees, escalation, and cover for third-party liability at the site.
Name everyone with an interest
Principal, contractor and subcontractors are usually named jointly so a claim is not disputed between them.
Extend before expiry if the project slips
Projects overrun. An expired policy mid-project leaves the site uninsured — tell us early and we extend it.
What you will need
- Contract or work order with the full value
- Project schedule and completion date
- Bill of quantities or cost break-up
- Site details and layout
- List of plant and machinery to be covered
Do not have all of it to hand? Send what you have — we will tell you what is still needed.
What can go wrong
Every product has a downside. Here is this one's, in plain language, before you decide anything.
- Insurance is the subject matter of solicitation. Read the policy wording before concluding a sale.
- If the project overruns and the policy expires, the site is uninsured from that moment. Extensions must be arranged before expiry, not after.
- Faulty design, faulty workmanship and defective material are excluded or restricted under standard terms. Check exactly how your policy treats them.
- Under-declaring the contract value triggers the average clause and scales down every claim.
- Testing and commissioning cover is often limited to a set number of weeks. Confirm it matches your actual programme.
- Wear and tear, gradual deterioration and normal maintenance are never covered.
Questions people ask us about this
Who should buy the CAR policy — the owner or the contractor?
Either can, and the contract usually specifies. What matters is that the principal, the contractor and the subcontractors are all named as insured parties, so a claim does not end up being argued between them.
My project is delayed. Is the policy still valid?
Only until its expiry date. If the programme has slipped, tell us before the policy lapses and we arrange an extension. Once it has expired the site is uninsured, and a fresh policy will not cover a loss that has already happened.
Does it cover bad workmanship?
Generally not. Faulty design, faulty workmanship and defective materials are excluded or narrowly restricted under standard wordings. Some policies cover resulting damage to other parts of the works while excluding the defective item itself — the exact wording matters.
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Still deciding?
Ask us anything about this product — including how we are paid on it. We will answer straight.