Construction & Erection All Risk

Construction sites are, by nature, high-risk areas.

Developers and contractors face a myriad of risks that can financially cripple a project, or even the companies involved. Trust an experienced broker to help get the cover you need, and be there when you need us most. 

When problems arise in construction projects, they can bring negative knock-on effects and additional liabilities. Sub-contracting of various specialised works can create other contractual problems, liability claims and court proceedings. 

In this situation, comprehensive cover from a trusted broker can make all the difference.

What is Construction and Erection All Risk insurance? 

Construction and Erection All Risk insurance covers developers and contractors during construction projects. It’s called ‘all risk’ because that's what it intends to cover. Policies are worded to provide peace of mind around the enormous risks construction companies face.

A policy can apply to an individual project, or to all building projects undertaken during a specified period (usually 12 months). This type of coverage is also referred to as Contract Works, Contractors All Risks, Erection Risk or Builders Risk.

Insurance is often arranged as a combined material damage and legal liability policy.

The material damage section covers loss of or damage to:

• The Contracted Works, i.e. the work that has been completed but not yet handed over to the Principal
• Materials used for the project stored on-site and off-site
• Temporary structures
• Hired-in plant and equipment
• Contractors’ plant and equipment
• Transit to and from the contract site

The legal liability section protects against claims for:

• Third-party bodily injury,
• Third-party death, or
• Property damage arising out of the construction project and ensuing maintenance obligations.

Insurance may be arranged by either the principal (owner), project manager or contractor. The policy will usually provide coverage for the principal, project manager, contractors and sub-contractors as one insured entity with a cross liabilities clause applying.  

Coverage is also provided during any maintenance (or defects) liability period when contractors are required to visit the site after completion of the project to comply with their maintenance obligations. 

Coverage variations/ extensions: 

Some common extensions to cover are: 

• Damage to existing buildings or property on-site
• Demolition and removal of debris costs
• Expediting costs
• Professional fees
• Damage to neighbouring property
• Employees’ tools and personal effects on-site
• Legal liability for hired-in plant

Coverage variations include: 

• Advance Loss of Profits (financial loss arising from delay of the project, e.g. loss of future profit or revenue and additional charges and expenses). 

• Integrated Project (or Wrap-up) insurance programme, which combines construction, marine cargo, delay in start-up, operational property damage/business interruption and third-party liability insurance for both construction and operational periods.