Meaning of Contractor All Risk Insurance, Coverage and Benefits

Contractor All Risk (CAR) provides insurance coverage to contractors working on a construction project. The policy offers compensation in event of property loss or damage, and also third party injuries.

Coverage of Constructor All Risk Insurance Policy

Material Damage

This includes tools and equipments used in carrying out projects, contract works and temporary buildings on site also the project itself.

Third Party Liability

Injuries, death and property damage sustained by third parties involved in the projects are covered.

The policy can also be extended to cover other liabilities including that of subcontractors and suppliers. It’s important to note that some events are not covered. This includes:

  • Property loss due to willful misconduct
  • Loss or damage caused by faulty design
  • Deductibles as stated in the policy
  • Cessation of work

Who is named on the policy?

The contractor and employers are named on the insurance policy. Financing companies can also included in the policy.

Any of the involved parties can file an insurance claim. However this type of insurance doesn’t give the insurance company right to subrogation. What is Subrogation?


Subrogation describe a legal right held by an insurance company to recover the amount of an insurance claim paid to the insured from the third party that caused the damage.

Since subrogation doesn’t apply to CAR, when a claim is paid to the policy holder, it can’t be recovered by the insurance company from the party responsible for the damage

Benefits of Contractor All Risk Insurance

We outlined the benefits that comes with having a contractor all risk insurance policy below.

Creates Financial Resources

Premiums for CAR insurance are in large amount. This creates huge funds for the insurance company who in turn use the money for investment.

Provides Security

Financial support is important for construction works because they often involves large amount of money to undertake this projects.

Tools and Equipment Recovery

Contactor can easily replace tools and equipment used in the carrying the projects with the financial compensation provided by CAR insurance.

Spreads Risk

Risks associated with big construction projects are quite massive. Having a CAR insurance relieves the insured of this huge risks.

Insurance companies offering Contractors All Risk Insurance in Nigeria

The following insurance companies offers contractor all risk insurance in Nigeria.

  • Old Mutual
  • Lasaco Assurance
  • Allianz Insurance
  • Universal Insurance
  • FBN General Insurance
  • Industrial And General Insurance (IGI)

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