- Project materials (such as cement, steel, wood, prefabricated structures, items required for interiors etc.), machinery required for civil construction have to be brought from the supplier’s premises to the site of construction or fabricator and stored during the project period.
- During the project period, there are possibilities of project materials getting damaged or destroyed by fire, flood, earthquake, accident and several other perils resulting in financial loss
- Project Insurance is a comprehensive insurance encompassing the entire project period and covering Construction of Buildings or Structures as well as Installation of Machinery, Testing and Commissioning.
Two Policies are issued for any Project viz.
- Contractor’s All Risk Policy: This Policy is essentially to cover the Civil Works;
- Erection All Risk Policy:is essentially to cover machinery whilst they are being stored, during installation, Testing and Commissioning.
These Policies can be obtained to cover the project materials listed above along with the cost of construction. Policy is taken by either by the Principal or the Main Contractor of a civil project since either of them will assume all financial losses arising out of an accident from the time the project materials arrive at site till the project is completed, tested and handed over to the Principal. All the sub-contractors are also covered under the single Policy taken by the main contractor.
Unlike other general insurance Policies, Policies covering Projects can be obtained for the entire period of the Project. In case of extension of Project due to any reason, the Policies can be extended for further period as may be required.
The Policy is structured in a manner to cover “all risk of physical loss, damage or destruction to project materials” arising out of “any cause” other than the notable exclusions. Sum insured to represent Estimated total value of the Project including cost of erection. Proposal form giving full details of the project will enable hassle free claim settlement.
Add On Covers
- Breakage of Glass: cover can be obtained for glass as add-on.
- Storage at Fabricator’s premises: Some project materials may have to be sent to fabricator’s premises for fabrication before they arrive at the Project site. Storage risk at fabricators’ premises can be added to the CAR Policy.
- Earthquake and Terrorism perils: The CAR Policy, generally, does not cover Earthquake and Terrorism perils. However, they can be covered as add-on perils to the CAR Policy.
- Debris Clearance expenses: Following loss/damage/destruction by a peril not excluded the affected project materials may have to be removed from the affected place enabling rebuilding or reconstruction, which may involve substantial expenses. These expenses can be covered for a specific sum insured at the inception of the CAR Policy as add-on cover.
- Third Party Liability: During the execution of the project, there is always possibility of lawful presence of any third party (other than workmen, family members). Arising out the construction activity, a third party may suffer death or bodily injury for which Principal/Contractor may be legally liable. Cover can be sought against this contingency as add-on under the CAR Policy itself for a specific sum insured.
- Surrounding property of Insured/Principal: This extension offers cover in respect of Loss of or damage to property located on or adjacent to the site and belonging to or held in care custody or control of the Principal (s) or the Contractor(s) shall only be covered if occurring directly due to the construction of the items insured under and happening during the period of cover. Expediting Expenses: Following loss/damage of project materials, insured may prefer to get the replacement by incurring additional expenses in order to stick to the schedule. Such additional expenses could be covered by specifying a sum insured at inception of CAR Policy.
- Construction Plant & Machinery: All equipment (belonging to contractors) that would be used in the construction activity can be covered for any accidental damage. This covered would, however, be restricted to Rs.25 lakhs only.
- Several other value additions such as Design Defect cover, Extended Maintenance Cover, Additional Customs Duty cover for Imported Items, Expediting costs could be made, if required.
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