What is contractors all risk insurance?
Contractors all risk (CAR) insurance is a combined construction policy that bundles contract works cover for the physical building, cover for the contractor's plant and tools, and third-party liability protection into one contract. It's written on an 'all risks' basis, meaning it covers any cause of loss unless that cause is specifically excluded.
- CAR combines three things in one policy: the works, plant/tools, and liability.
- It's the standard structure used across UK residential, commercial, and civil engineering projects.
- Hired-in plant is usually a separate add-on, not automatically included.
- Faulty design or workmanship is generally excluded, though resulting damage elsewhere in the works may still be covered.
- Policies can be arranged per-project or as an annual renewable policy for busy contractors.
The three sections in plain English
Why 'all risks' matters
What's usually left out
Theft of tools overnight on a commercial fit-out
Scenario: A contractor's power tools and a site generator were stolen from a locked commercial unit mid-fit-out, halting work for over a week while replacements were sourced.
Resolution & Judicial Outcome: The plant and tools section of the contractor's CAR policy paid out for the stolen equipment after the theft was reported to police, and the contract works section covered the cost of re-securing the site.
What You Should Do: Step-by-Step Action Plan
Critical Mistakes to Avoid
- Assuming owned plant cover automatically extends to hired-in equipment — it usually doesn't.
- Buying liability limits based on habit rather than what the specific contract or client actually requires.
- Treating a CAR policy as a substitute for professional indemnity insurance if you also provide design services.
- Leaving sub-contractors uninsured and uncovered by the main policy's liability extension.