CAR Policies:
In the realm of construction projects, particularly those involving substantial civil works such as roads, dams, bridges, and hydro power plants, risk management becomes paramount. This is where the Contractor’s All Risk or also known as CAR Policies steps in, offering a robust safety net against an array of potential perils.
Policy Coverage and Exclusions:
The CAR policy, designed for projects where civil works constitute more than 50% of the total cost, provides comprehensive coverage for physical loss or damage during various stages of the project. This includes storage at the site, construction activities, and even during the defects liability period if chosen by the contractor.
Coverage extends to location risks such as fire, lightning, theft, and burglary, as well as handling risks like impact damage, collision, and crane failures. Human element risks, major perils like earthquakes and floods, and atmospheric disturbances are also covered.
However, certain exclusions exist, such as losses discovered only during inventory, normal wear and tear, and gradual deterioration due to atmospheric conditions. Notably, the policy does not cover faulty or defective design unless specific extensions are opted for.
Sum Insured and Exclusions:
The sum insured should represent the total completed value of the project, including construction materials, wages, and associated costs. Exclusions range from losses due to faulty design to penalties for non-fulfillment of delivery terms.
Period of Cover and Add-Ons:
The policy starts from the arrival of the first consignment at the construction site or the commencement of work, whichever is earlier, and expires upon project completion. Extensions may be granted, subject to additional premiums, if the construction work extends beyond the policy period.
Installment facilities, premium adjustments, and provisions for early project completion refunds are incorporated to enhance flexibility for the insured.
Additional Coverages and Clauses (CAR Policies):
Various add-on covers and clauses, such as clearance and removal of debris, overtime charges, and indemnity for owners’ surrounding property, serve to address specific needs. Specialized risks, like those associated with water projects, tunnels, and irrigation systems, are also considered with adjusted deductible amounts.
Design Defect Cover and Maintenance Period:
The policy offers different levels of design defect cover, each addressing specific scenarios. Additionally, it extends to cover loss or damage during the maintenance period, provided it aligns with contractual requirements.
Rating Aspects and Underwriting Considerations:
For effective underwriting, considerations extend to location, exposure to natural catastrophes, proximity to water bodies, and the nature of the construction, such as tunnels or hydropower projects. Specific warranties and endorsements address risks associated with each project type.
Floating Solar Power Projects:
Floating solar power projects are gaining traction, and underwriting for such ventures involves considerations for anchoring, water level variations, and possible damage during cleaning activities.
Jetties, Ports, and Breakwaters:
For projects involving jetties, ports, and breakwaters, understanding the location’s vulnerability to natural disasters and the efficacy of breakwaters is crucial. Specialized endorsements, like the Munich-Re Wet Risk Endorsement, cater to exclusions related to marine structures.
Conclusion:
As the construction industry evolves, so do the risks associated with it. Tailored insurance solutions play a pivotal role in safeguarding these ambitious endeavors, ensuring that the builders can forge ahead with confidence, even in the face of unforeseen challenges.
