What does contractors all risk insurance not cover?
Standard contractors all risk policies typically exclude faulty design, workmanship and materials themselves, ordinary wear and tear, uninsured sub-contractor negligence unless extended, hired-in plant unless separately added, and consequential losses such as delay penalties unless a specific extension is bought.
- The 'faulty workmanship' exclusion is narrow: it excludes redoing the faulty part, not necessarily the resulting damage elsewhere.
- Wear and tear, corrosion, and gradual deterioration are excluded on every standard policy.
- Hired-in plant and uninsured sub-contractor negligence are common gaps that need specific extensions.
- Consequential losses like delay costs or loss of income are rarely covered by default.
- Contractor insolvency and contract disputes sit outside what an all-risks property policy is designed to cover.
The design and workmanship exclusion
Gaps that need a specific extension
What's excluded outright, with no extension available
Faulty roof detail vs. resulting water damage
Scenario: A poorly sealed roof junction let water into a newly plastered ceiling below, causing the plaster to collapse weeks after the roofing work was finished.
Resolution & Judicial Outcome: The insurer declined the cost of re-doing the faulty roof detail itself (the design/workmanship exclusion) but paid for repairing the damaged plaster and ceiling below, since that was resulting damage to a separate, non-faulty part of the works.
What You Should Do: Step-by-Step Action Plan
Critical Mistakes to Avoid
- Assuming 'all risks' means literally everything is covered.
- Only checking exclusions after a claim has already been declined.
- Confusing a design exclusion with a total denial of the whole claim, when resulting damage may still be payable.
- Not asking whether your specific trade has any additional standard exclusions (e.g. asbestos, subsidence).