Engineering insurance provides coverage for risks associated with construction and engineering projects, equipment, and machinery. Contractor's all-risk (CAR) insurance specifically covers damage to construction worksites and materials, as well as legal liability, from the start of a project through completion and potentially extended to the maintenance period. CAR insurance is a non-renewable policy that transfers the financial risks of property damage and legal liability during construction to the insurance provider.

1. CONTRACTORS
ALL RISKS
Prepared By: Salum Mlaponi
Insurance Practitioner

2. Introduction:
• Over decades the world has witnessed significant inventions after
exploiting the basic scientific principles which results to
development of useful tools and machines.
• This is the period of birth of the field of engineering.
Engineering refers to the use of scientific principles and laws to
design and building machines, apparatus, develop structure and
develop manufacturing process and other items, including but not
limited to bridges, tunnels, road, vehicles and buildings.

3. Continue…….
• Engineers are involved either designing or developing
structures, machines or utilizing them separately or in
combination for the purpose of construct or operate for
their design.
• At that time this new inventions result to several risk which
involving fundamental property damage and loss of life
made it necessary to take all precaution measures to
minimize and control this danger.

4. Continue…….
• Rather than sorely depend on longstanding
traditional risk management measures, contractors
and engineering are forced to find an alternative
solution to transfer the financial consequence of
this risk to a party which is financially capable to
handle.

5. Engineering Insurance:
• Various insurance cover has been developed to respond on the
risk rise either on manufacturing project, installation projects or
on the machines and apparatus used on those project.
• “Engineering Insurance refers to the insurance that provides
financial security to the risks faced by ongoing construction
projects, installation projects, or on machines and
equipment used in project operation”.

6. Continue…..
• Thus to say depends on the project we can divide Engineering insurance
to Construction All Risk and Installation All Risk and based on the
machines and apparatus used on the project we can divide Engineering
Insurance into Machinery Breakdown Insurance, Contractor’s Plant and
Machinery and Electronic Equipment Insurance.
• We can say, Engineering insurance provide economic safeguard for any
damage or any loss caused or attributed by material damage rising during
construction and maintenance period and any third party legal liability
rise during that period as well as on equipment and machinery damage
or loss.

7. Continue…….
• The beginning of Engineering insurance especially
for Contractor’s All Risk and Erection All Risk is
the period of starting or beginning of construction
or erection project and end at completion of the
project (Extend to Maintenance Period).

8. Types of Engineering Insurance:
• Engineering Insurance depends on either project or non-
project engineering which results to two main category of
Engineering Insurance;
• Non-Renewable Engineering Insurance
• Contractor’s All Risk Insurance (CAR)
• Erection All Risk Insurance (EAR)

9. Types Continue……
• Renewable Engineering Insurance
• Machinery Breakdown Insurance
• Electronic Equipment Insurance
• Contractor’s Plant and Machinery
• Deterioration of Stock Insurance
• Business Interruption Insurance following Machinery Breakdown.

10. CONTRACTOR’S ALL RISK
INSURANCE (CAR)
• Contractor’s All Risk provide cover for Civil Engineering
works, if you are familiar with engineering activities you
probably know what “Civil Engineering” is. For those who
do not know Civil Engineering project deals with the
design, construction and maintenance of the physical built
below and above the ground such as roads, railways,
residential and office buildings, tunnels, airport, dams,
sewerage system etc.

12. CAR Continue……
• Contractor’s All Risk designed to respond for the loss arising from
sudden physical damage resulting from insured peril for the whole
project during the project period and can be extended to cover legal
liability to the third party for bodily injury and property damage resulting
from construction activities on the site. In particular cover constitute the
following;

13. Material Damage Section
• Cover provided for Contract works means that all
activities carried out by contractors and subcontractors
this include preparatory work on site such as excavation,
grading, leveling, permanent work, temporary work
such as execution of temporary structure such as
diversion cuts and any material to be used in the
construction work stored in construction site.

14. Third Party Liability
• Cover for legal liability to the third party for bodily injury
and property damage resulting in the connection of
construction work on the site excluding any liability for
bodily injury or property damage for the employees or
workmen of the contractors or subcontractors who are
connected to the construction project. The cover can be
extended to cover for the surrounding property located on
the site and surrounding the site.

15. Period of cover
• The beginning of Engineering insurance especially for Contractor’s All
Risk is the period of starting or beginning of construction or after the
construction material and other insured items have been unloaded on the
site and end at completion of the project (Extend to Maintenance Period).
• If the cover extended to cover machinery used in the construction project
cover for this machinery start from their unloading to the construction
site and terminate on the removal from the construction site.

16. Question of Thought
• My opinion: Normally Construction project requires
performance bond to be in place where a third party
guarantor will be called by employer to complete the
contract work or pay a bond value when a client
(Contractor or subcontractor) fails to perform the
work, but does this performance bond also extended to
cover maintenance period of project after the
completion of the project has been taken over?