Understanding Construction All Risks CAR Insurance for Major Projects

Construction All Risks insurance, commonly known as CAR, is one of the most important insurance policies used in major construction projects. It is designed to protect the project during the construction phase against a wide range of risks that may cause physical damage or loss connected to the works. Although the wording suggests broad protection, managing a claim under a CAR policy requires careful understanding of coverage, exclusions, limits and post-loss duties.

In large projects, the loss value can be significant and responsibilities may overlap between the owner, main contractor, subcontractors, consultants, suppliers and insurers. This is why a technical loss adjuster who can read both the policy and the engineering documents is essential to achieving a fair and accurate settlement.

What Does a CAR Policy Usually Cover?

A CAR policy usually covers sudden and unforeseen physical damage to the construction works during the policy period. Depending on the wording, coverage may include temporary works, project materials, site-related equipment, fire damage, flood damage, partial collapse or certain workmanship-related events.

However, every policy has limits. Part of a claim may be challenged or excluded because of design defects, gradual deterioration, poor maintenance, unauthorized works or unsupported costs. Reading the policy is therefore as important as inspecting the site.

Common Mistakes in CAR Claims

• Late notification of the incident or starting repairs before proper documentation.
• Failure to separate incident-related damage from betterment or additional works.
• Submitting general cost estimates without invoices, quotations or support.
• Not providing the project schedule when delay is claimed.
• Failing to identify the technical cause of loss clearly.
• Mixing physical damage with indirect cost elements without analysis.

How Can Settlement Be Accelerated?

The first step is prompt notification and preservation of evidence. The site should be photographed, documents should be secured and the sequence of events should be recorded. The insured should also provide the insurance policy, construction contract, drawings, bills of quantities, consultant reports, variation orders, invoices and daily site records.

The more organized the documentation, the faster and more accurate the adjustment process becomes. The objective is not only to prove that damage occurred, but to prove that the damage resulted from a covered event and that the claimed cost is necessary, reasonable and directly connected to that event.

The Role of the Loss Adjuster

The loss adjuster reviews the claim from technical, insurance, financial and scheduling perspectives. The adjuster inspects the site, defines the damage scope, reviews the cause of loss, compares the claim with policy conditions and examines the documents supporting the claimed value. In some claims, schedule analysis may be required to assess the impact on project completion.

In major claims, the technical report is important for insurers, reinsurers and brokers because it clarifies where policy responsibility applies and where uninsured costs, betterment or unrelated works begin.

When Does a CAR Claim Become Complex?

A CAR claim becomes more complex when it involves structural collapse, widespread damage across multiple parts of the project, delay in completion, soft costs or advance loss of profits. Complexity also increases when multiple contractors are involved or when parties disagree over the cause of loss or responsibility.

Conclusion

CAR insurance is essential for protecting construction projects, but it does not eliminate the need for professional claim management. Successful settlement depends on early documentation, policy understanding, technical analysis and separation of covered damage from unrelated costs.

River City Technical Consultants provides specialized support for construction project claims, from the first site inspection through to the final report, helping insurers, reinsurers and brokers make clear evidence-based decisions.