Construction & Erection All Risks (CAR/EAR)
Construction all risks (CAR) and erection all risks (EAR) insurance covers unforeseen damage to construction works, plant and site facilities during the project and erection phase.
Comparison profile
- Trigger
- All risks
- Insured interest
- The construction or erection works under contract, temporary site facilities, and often the principal's existing surrounding property, for the duration of the project.
- Rating basis
- Total contract value / sum insured, Construction period and testing/maintenance period, Project complexity and site conditions, Loss experience of principal and contractors
- Typical limits
- Sum insured normally equals the full contract value, with separate limits for existing property, delay-in-start-up, and third-party liability extensions.
- Typical deductibles
- Per-occurrence deductible, often higher for natural catastrophe perils and testing or commissioning phases.
- Target segments
- Industry, Infrastructure and construction principals, Contractors and consortiums
Insured events
- Storm, flood, and other natural hazards during construction
- Fire and explosion on the construction site
- Faulty workmanship and defective materials (depending on wording)
- Theft and vandalism at the site
- Collapse during erection or testing
Key exclusions
- War and nuclear energy
- Design errors excluded under the applicable wording
- Wear and tear, and gradual deterioration
- Consequential loss beyond delay-in-start-up extensions
- Penalties and liquidated damages under the construction contract
Scope of cover
Insured are the construction or erection works, site facilities, temporary structures and often the principal’s existing property. Covered is unforeseen damage – from storm and fire to workmanship defects (depending on the wording). Liability, delay in start-up (DSU/ALoP) and transit modules are commonly added.
Project-specific features
The policy runs on a project basis from start of works to acceptance, with extensions for testing and maintenance periods. Insureds are usually the principal and all contractors jointly; waivers of subrogation between the parties prevent internal disputes.
Practical note
Delay in start-up cover requires a robust schedule and cash flow analysis; critical long-lead components (transformers, turbines) determine the indemnity period and sublimits.
Comparison and delineation
CAR/EAR is a project-based, time-limited all-risks policy running from start of works to acceptance, whereas property all risks insures the finished asset on a continuous annual basis once operational. On handover, cover typically transitions to machinery insurance for internal mechanical and electrical breakdown perils and to the standing property programme for the completed structure. Where the schedule itself carries financial risk, a delay-in-start-up extension mirrors business interruption logic but is triggered by construction delay rather than damage to an operating asset. Waivers of subrogation between principal and contractors avoid disputes that would otherwise undermine the single joint policy.