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Benefits of Contractors' All-Risk Insurance Policy

Posted on 18 Jul, 2024

According to the Construction Industry Development Council, around 32 million people are involved in the booming and thriving construction sector in India, which is worth Rs 2,48,000 crores. However, managing projects comes with inherent risks, from third-party liability lawsuits to unforeseen events and material damage due to natural disasters. These events are stressful, delay projects, and cost a significant part of your budget.

Contractors' All-Risk Insurance (CAR) can be your safety net, offering comprehensive coverage to shield your construction project from unplanned financial shocks and ensure its smooth completion.

Let’s delve into the benefits of a CAR policy in India, explaining how it safeguards your investment and offers peace of mind.

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The Advantages of Investing in a Contractor's All-Risk Insurance Policy

CAR insurance protects against unexpected expenses and financial losses that may occur during the construction of projects. Contractors, developers, and project owners can get the following benefits from a contractor's all-risk insurance policy.

Comprehensive Protection

A CAR policy provides extensive and comprehensive coverage for a range of perils that can disrupt the smooth execution of a construction project.

Standard perils include the following —

Property damage: This insurance policy offers property damage, including buildings, equipment, and materials, due to theft, fire, vandalism, natural disasters, and other perils, as mentioned in the Contractor's All Risk Insurance Policy documents.

Construction equipment: It provides coverage for damage or loss to construction equipment and machinery used during the execution of the project.

Third-party liability: A CAR Policy offers coverage for financial or legal liabilities arising from injuries or accidents caused to a third-party person or property during the construction activities.

Financial Protection

Construction projects are inherently exposed to diverse financial risks, such as property damage (self or third party), equipment failure or loss/damage, legal costs, repair or replacements of machinery and equipment, medical expenses for workers (for on-site accidents), etc. The Contractor's All Risk Insurance policy provides financial protection, covering these unplanned expenses as outlined in the policy document. It helps contractors to recover from setbacks and continue project implementation without experiencing significant financial burdens.

Legal Compliance

In India, obtaining construction permits in many states or regions is tied to having CAR insurance. Hence, investing in a CAR policy will help you adhere to guidelines legally mandated to work in the construction sector.

Project Continuity

Contractors need to adhere to strict deadlines, and it is essential to maintain project continuity. It is paramount for the contractor’s reputation and eligibility for future projects. A Contractor's All-Risk Insurance Policy with comprehensive coverage ensures project continuation. In the event of a risk mentioned in the policy that disrupts the flow of the project, CAR insurance can support you in getting back on track, covering the cost associated with delays, and completing the construction work within a revised timeframe.

Peace of Mind

A construction site is prone to several unpredictable incidents that can cause significant financial stress. A Contractor's All-Risk Insurance Policy provides peace of mind and keeps you prepared with a contingency plan. It mitigates the economic impact of unforeseen circumstances. Peace of mind helps contractors focus on projects and deliver high-quality output on time and within budget.

Key Factors to Evaluate Before Buying a Contractor's All-Risk Insurance Policy

CAR insurance is an excellent shield against financial stress and setbacks for construction projects. However, you must compare various policies and quotes offered by different insurers before finalising a plan. Here are some vital factors to consider for a Contractor's All-Risk Insurance policy that will help you pick the right one.

Premium costs are usually influenced by project size, contractor’s profile, location and other factors. A lower premium may mean inadequate coverage. Hence, you must look at the premium, the sum insured, and the exact scope of coverage.

Visit comparison websites and compare quotes and the features of various plans from leading insurance providers. Look for add-ons that will enhance the scope of coverage but at an affordable, additional premium.

If you have any questions, talk to an insurance advisor or expert to pick a CAR plan that matches your project’s specific requirements and budget.

Smooth project execution improves credibility and mitigates potential financial risks. Without Contractor's All Risk Insurance, construction businesses would face significant liability concerning financing operations and construction processes.

Conclusion

A Contractor's All-Risk insurance policy is an invaluable and strategic tool for any construction project in India. A CAR policy from a reliable insurer provides comprehensive coverage by mitigating financial risks, ensuring project continuity without glitches, and protecting against unforeseen events. It allows you to focus on what matters most —delivering a successful project on time. Don't let unexpected events jeopardise your hard work. Consider a CAR policy as an investment in the future of your construction business.

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This contains only an indication of the cover offered. For complete details on risk factors, terms, conditions, coverages and exclusions, please read the sales brochure carefully before concluding a sale.ICICI trade logo displayed above belongs to ICICI Bank and is used by ICICI Lombard GIC Ltd. under license and Lombard logo belongs to ICICI Lombard GIC Ltd. ICICI Lombard General Insurance Company Limited, ICICI Lombard House, 414, Veer Savarkar Marg, Prabhadevi, Mumbai – 400025. . IRDA Reg.No.115. Toll Free 1800 2666. Fax No – 022 61961323. CIN (L67200MH2000PLC129408). customersupport@iciclombard.com. www.icicilombard.com. (Engineering Insurance, 4010 , IRDAN115P0010V01200607)