Contractors’ All Risks (CAR) insurance provides dedicated risk protection during the construction works of buildings (such as offices, factories, shopping malls, and dwelling spaces) as well as large-scale civil engineering projects, including the construction of roads, railways, quays, tunnels, dams, floodgates, airports, and underground plazas.

Erection All Risks (EAR) Insurance is a specialized policy that provides coverage for physical loss, damage, or legal liability during the installation and testing of machinery, plant equipment, and steel structures. It protects project owners, contractors, and suppliers from unforeseen events such as accidents, fire, or natural disasters until project completion and handover.

Erection All Risks (EAR) insurance covers structural and engineering risks encountered during the installation and erection works of various machinery, the construction works of plants and factories, and the erection of heavy superstructures like bridges and steel towers.

Yes, a single project often requires both CAR and EAR, especially in large or complex developments.

• CAR covers civil works (e.g., buildings, roads, foundations)
• EAR covers installation works (e.g., machinery, electrical systems)

Relying on a single policy can create significant coverage gaps. Therefore, both are arranged either separately or as a combined (composite) policy to ensure full protection.

The Sum Insured is calculated based on the Total Contract Value (TCV) upon completion.

This comprehensive value includes engineering costs (the cost of goods or supplier works, material costs, taxes, custom duties and transportation costs), the cost of construction or erection (labor costs), various operational costs (such as commissions), and any service equipment supplied directly by the Principal.

High-risk engineering businesses and operations involved in the installation and erection of industrial machinery, the construction of manufacturing plants and factories, or projects like bridges and steel towers are advised to obtain Erection All Risks insurance to protect against heavy financial losses from physical damages that occur during installation and erection works.

Structural developers and business owners managing the construction of buildings (such as offices, factories, shopping malls, and residential properties) or handling civil engineering infrastructure projects (such as roads, railways, quays, tunnels, dams, floodgates, airports, plazas, or underground structures) need to carry Contractors' All Risks insurance to shield themselves from losses resulting from active site damages. 

Policies can be issued in the name of the contractor, the principal, or in joint names depending on specific project mandates. All concerned parties eligible for coverage include the Principal, Owner, or Employer; the Main Contractor; Sub-contractors; and Consultants or Engineers.

In Contractor’s All Risks Insurance, Permanent Works refers to the actual physical structures, buildings, or engineering installations that are being constructed and are intended to remain permanently on the site after the project is completed and handed over to the owner.

Yes, temporary works constructed to carry out the contract works are covered under Section 1 (Material Damage), provided their value is included in the total sum insured.

TCV (Total Contract Value) represents the total value of the project upon completion, including materials, labor, equipment, and all associated construction or erection costs.

Yes, Labor costs are included in the Total Contract Value (TCV).

The Works Period typically commences from the date specified in the policy, usually when work begins or materials are first delivered to site, whichever occurs first.

It expires at the time when the works are taken over by the principal, put into service, or the date specified in the schedule.

Maintenance Period cover is not included under standard CAR/EAR policies and must be added by endorsement (e.g., maintenance visits cover or extended maintenance cover).

It commences at the provisional taking over (the end of the construction/erection period when the Taking Over Certificate is issued)

It terminates at the end of the 'defect liability period' when the 'Final acceptance certificate' is issued.

Under Section 1 (Material Damage), the insurer agrees to indemnify the insured by cash payment, repair, or replacement (at their own option) for any sudden and unforeseen physical loss or damage to insured property from any non-excluded cause, provided the payout does not exceed the individual item limits, single-event caps, or the total sum insured. Additionally, the insurer will reimburse the costs for clearing debris following a covered loss, but only if a separate and dedicated sum insured for debris removal has been explicitly entered into the policy schedule.

Loss or damage caused by fire is covered under Section 1 (Material Damage), subject to exclusions and policy conditions.

In general, loss or damage caused by flood and rain is covered under Section 1 (Material Damage), unless specifically excluded or subject to sub-limits and policy conditions as stated in the policy schedule

In general, loss or damage caused by Earthquake and Landslide are covered under Section 1 (Material Damage), unless specifically excluded or subject to sub-limits and policy conditions as stated in the policy schedule.

In general, loss or damage caused by theft and burglary are covered under Section 1 (Material Damage), unless specifically excluded or subject to sub-limits and policy conditions as stated in the policy schedule.

In general, loss or damage arising from malicious acts is covered under Section 1 (Material Damage), unless specifically excluded or subject to sub-limits and policy conditions as stated in the policy schedule.

Electrical short-circuiting is generally covered under Section 1 (Material Damage) if it results in sudden and unforeseen physical damage, subject to policy exclusions such as inherent defects.

Section 2 (Third-Party Liability) covers the Insured’s legal liability for third party bodily injury, illness, or property damage occurring on or near the site during construction, up to the policy limit. It also covers approved defense costs and legal expenses within that overall limit

A contractor's immediate family members generally cannot claim under Section 2 (Third-Party Liability). Section 2 excludes claims from the contractor's immediate family members, as they do not qualify as independent third parties under the policy rules

No, liability for bodily injury or illness of employees or workmen of the contractor/principal/any person related with construction or held in care, custody, or control of the contractor is excluded under Section 2 (Third-Party Liability).

Yes, third party property damage is covered under Section 2 (Third-Party Liability), provided it occurs in direct connection with the insured works.

Deductible/Excess refers to the out-of-pocket amount that the insured must first contribute toward a loss before a claim is paid. The insurance company will deduct this fixed amount from the total claim value and pay out only the remaining balance of the covered loss.

Common exclusions include wear & tear, faulty design, war and nuclear risks, willful negligence. Additional exclusions may apply as specified in the policy wording and policy schedule.

The documentation required for CAR/EAR policy consists of recent risk photos, detailed FEA information, and a Structural Engineering Report from an RSE. Please note that you may also be required to provide additional supporting documents if requested during AYA SOMPO's underwriting review.

Yes, it reduces the risk profile significantly. Maintaining 24-hour security personnel on-site greatly reduces the risk of theft, vandalism, and malicious damage. Underwriters view this as an excellent risk-mitigating factor, which helps in getting better policy terms.

Under CAR/EAR insurance, underinsurance occurs when the Sum Insured (Total Contract Value declared at policy inception) is less than the actual, full value of the project works completed or in progress at the time of the loss. When this discrepancy occurs, the Condition of Average is enforced, and any claim payout is reduced proportionately.

An endorsement is a formal, legal amendment added to an active Contractor’s All Risks and Erection All Risks insurance policy to modify its original terms, such as Extensions of Policy Period, Sum Insured / TCV Adjustments, Changes to Insured Parties, Location or Site Extension and any other changes. Rather than canceling the existing contract, an endorsement legally records and implements these specific mid-term updates. 

No, standard CAR/EAR policies do not cover financial losses such as delay in project completion or loss of profit.

No, existing property or surrounding property is not automatically covered under a standard CAR/EAR policy.

Materials in transit are not covered under a standard CAR/EAR policy. A separate Marine Cargo Insurance policy is usually required for transportation-related risks.

The cost of rectifying defective design, material, or workmanship is generally not covered.