Contractor's All Risk Policy Insurance

·         Contractor's All risks insurance – This insures against physical damage to the works (and usually materials on site).  All risks insurance typically covers the full reinstatement value of the works plus a mark up for any ancillary costs (such as consultancy and professional fees) that are incurred. 

As contractors generally have “global” all risks insurance policies that cover all its projects, it is generally more cost effective for contractors to maintain this insurance.  Once taken over, the risk in the works passes to the employer, who needs to ensure that the works are adequately insured. 

Although defects are usually excluded from all risks insurance policies, wording can be purchased that provides cover for damage that a defect causes to other parts of the works.  For this insurance to be meaningful, the different components of the works must be carefully and clearly delineated. This insurance is only generally available if the works are being undertaken in accordance with well established (rather than evolving) construction techniques. 

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