Construction All Risk insurance

Construction All Risk (CAR) insurance is cover for damage to property, and also third-party injuries during building and engineering projects. Howden consultants can design you bespoke coverage, with a range of add-ons to suit your risk profile precisely.

With a collective experience of over 100 years, the Howden Malaysia team are deeply experienced in handling large and specialised risks presented by high-value contracts.

We are a key risk advisor on mega-projects in every major industry: infrastructure, power, energy, port, mixed development and many more.

We also have in-depth global experience of Private Finance Initiative (PFI) projects and their stringent contractual requirements around risk management.

What Construction All Risk covers

An “All Risks” policy covers all risks, except those specifically and explicitly excluded.

The main categories of risk CAR covers are:

Material Damage

CAR covers almost any sudden and unforeseen physical loss or damage occurring to the contract works/property/items insured, during the period of insurance (except as specifically excluded in the policy, see below).  

Third-Party Liability

The insurance also covers liabilities when you become legally liable to pay damages due to:

1. Accidental bodily injury to or illness of a third party
2. Loss or damage to property belonging to a third party

What it doesn’t cover

All insurance policies by their very nature have exclusions; it is your broker's job to ensure that any exclusions are accounted for in other policies or at the very least, you are fully aware of what you aren't covered for. 

The standard exclusions of this policy:

• War, Civil War and any act of terrorism
• Radioactive and nuclear energy risks
• Wilful acts or wilful negligence
• Wear and tear
• Faulty design
• The cost of replacement, repair or rectification of defective material and/or workmanship
• Mechanical and/or electrical breakdown or derangement of construction plant and machinery
• Consequential loss of any kind
• Seepage, Pollution and Contamination

Popular add-ons

Contract works

A form of property insurance that covers structures and materials associated with the job in the event of damage. 

Professional fees

Covers the cost of consultants required to help rectify damage to the contract works. For example, architects or surveyors.

Environmental liability    

If you have an accident that pollutes land, air or water or harms natural resources and/or biodiversity, the clean-up can land you with a huge bill. 
Environmental liability insurance is there to cover the costs of restoring the equilibrium. 

Latent defects

Typically used by property developers and building contractors, to protect them against damage caused by defective design or workmanship that is undiscovered until later.  

Latent defects insurance covers costs associated with remedial work. The policy can be used up to 12 years after the job’s completion.

Construction professional indemnity

Construction professional indemnity protects you from claims made in the event of negligent work, giving poor advice or errors and omissions. 

Call and speak to a broker about getting a bespoke package to meet your needs precisely.  

Delays in start-up

Delays in start-up

Sometimes called “advanced loss in profits insurance”, delay in start-up insurance protects against loss of revenue resulting from damage to works and structures that causes a delay in completing the project. 

Non-damage delays 

Primary contractors can find themselves liable to pay damages to subcontractors if the project is delayed.  A ‘no damage delays’ clause transfers this risk (subject to certain conditions. For example, delaying on purpose is excluded).

Claims preparation clauses

Claims preparation clauses cover reasonable and supportable costs of getting a claim ready, including consultants and expert witness fees. 

Where large claims are involved, there can be considerable costs involved in getting the required information and supporting evidence together.

Many people believe that this is the work of the loss adjuster, but, in fact, that’s a common misconception. Loss adjusters work on behalf of the insurance company, appraising and adjusting the claims presented to them.

Expert claims preparation adds significant value for the larger, more complex claims, and as such is an important consideration for construction and engineering companies.

Often, this can involve engaging an external consultant to help. Often they will turn to their existing trusted advisors, e.g. their accountant and insurance broker.

Where this incurs a fee, the claims preparation clause will activate and allow you to recoup the costs. 

What Howden can do for you

Typically construction and infrastructure companies come to us for advice around insurance and risk management around meeting contract terms. Our expertise comes to the fore when reviewing the warranties and indemnities and studying the risk exposure of the various active parties.  

Initially, we will:

• Conduct a thorough review of project contracts’ requirements, risks and liabilities
• Advise on construction insurance procurement options and methods
• Provide advice on insurance coverage requirements
• Consider risk allocation and indemnity & hold harmless provisions between project parties

Working in conjunction with your bid team, we design a holistic program structure covering the full suite of risks, minimising gaps and at the same time, achieving the economies of scale that come with a comprehensive program.

We can design a consolidated insurance program (CIP) that “wraps up” coverage for all the risks you and your partners face.

We can take away some of the stress of a major project by:

• Advising on insurance and other risk mitigation solutions
• Structuring the program
• Conducting the insurance tender process to secure the best terms
• Executing placement & management
• Handling insurance claims
• Assisting in project risk & safety program with respect to risk and insurance

Who’s in control?

We can design risk management and insurance to be:

• Owner controlled
• Contractor controlled
• Principal controlled
• Partner controlled (jointly sponsored)

We then support in the day-to-day management

Ongoing program monitoring is crucial to ensure there are no gaps of cover in the event of delay / phase handover or other issues that can inevitably arise during the construction period.

Additional value-added services 

We have servicing milestone and/or service level agreements depending on the project and insured’s requirement. 

Some of the value-added services we offer:

• Roadshows and program manuals
• Policy briefing
• Risk engineering exercise and improvement
• Claims management / communication
• Training / risk awareness program