In short: Contractors all risk insurance covers the works, not your machines. It attaches at the commencement of work or the unloading of the first consignment, whichever is earlier, and ends at handover or policy expiry, whichever is earlier. Physical loss or damage to the contract works and third party liability arising from the site are the two halves of it. Contractor’s plant and machinery is an extension, so your excavator is inside the policy only if somebody bought that extension. When a tender asks you to produce CAR cover, the question to settle first is whose machines are actually in it.

A principal contractor hands you a tender condition requiring contractors all risk cover for the duration of the works. You arrange it, file the certificate, and put a machine on the site. Three months later the excavator is damaged and the claim goes to the CAR insurer, who declines it — correctly.

The policy was never about the machine. Understanding which risk it attaches to is the difference between a project you have insured and a project you think you have insured.

What contractors all risk insurance is built around

A CAR policy is written for a project. Insurer wording describes it as designed to cover civil engineering projects such as buildings, roads, airports, flyovers, water tanks and sewage treatment plants. What it insures is accidental physical loss or damage to the contract works during execution, unless specifically excluded — which is where the “all risk” name comes from.

That gives the cover a shape worth holding in your head:

The subject is the works. Physical loss or damage to property under construction, plant, machinery and tools, works brought on to the site and temporary works erected there, plus third party liability related to work conducted on the site.

It runs on a project clock, not an annual one. Cover begins at the commencement of work or after unloading of the first consignment at the project site, whichever is earlier, and terminates on handing over of the works to the principal or on expiry of the policy, whichever is earlier.

It can name more than one party. Cover can be extended to include the interest of suppliers or manufacturers, contractors and subcontractors. One project policy, several protected interests.

Read the two “whichever is earlier” clauses together and a practical risk shows up straight away. A project that runs late does not drag its policy along behind it. The cover stops at expiry even if the works are nowhere near handover, and the gap belongs to whoever failed to extend it.

Where your machine sits, and why that is the important question

Here is the line that matters most to an equipment owner. Among the extensions an insurer lists against a CAR policy — earthquake, terrorism, escalation, maintenance cover, debris removal, third party liability, cross liability, inland transit and others — is contractor’s plant and machinery.

An extension is something you ask for. The base policy is about the works being built; your machines are the tools doing the building, and they come inside the policy only when that section is added and rated.

So a machine standing on a site covered by somebody else’s CAR policy has, by default, no cover under it for damage to itself. What responds to that is a contractor’s plant and machinery policy, which attaches to the machine rather than to the project and follows it from site to site. The comparison between the policy types, and which one answers which loss, is set out in the construction equipment insurance guide.

The same question gets sharper the moment a machine goes out on hire, because then there are two businesses and two policies that each might or might not respond. That situation is worked through in insurance for rented equipment, and it is the most common way owners discover the gap.

When a tender asks for CAR cover

Treat the requirement as a set of questions rather than a box to tick.

Settle this Why it decides your exposure
Who buys the policy The contract says. Do not assume the principal has arranged it
Whose interests are noted Principal, contractors and subcontractors can all be included — or not
Whether plant is extended in Decides whether your machines are covered at all
The policy period against the programme Cover ends at expiry even if the works are unfinished
The compulsory excess It varies with the type of work and you carry it on every claim
Maintenance cover The base policy stops at handover; the defects period does not

The premium itself moves with the type of project, the sum insured, the duration and the voluntary excess you accept. Where the policy period is longer than twelve months, premium can be paid in instalments — useful on a long road or canal package where the cover has to be in force from day one but the money arrives in running bills. If the running-bill cycle is what is squeezing you, the working capital side of it is covered in working capital loans for contractors.

Maintenance cover and the defects period

The base policy terminates on handing over. Most construction contracts do not.

A defect liability period keeps the contractor answerable for a stretch after the works are handed across, and insurers sell limited maintenance cover and extended maintenance cover as separate extensions precisely because the base wording has already run out by then. If your contract carries such a period — and the mechanics of it are set out in the note on the defect liability period in construction — then the insurance covering it is a decision you make at inception, not one available to you later.

The bottom line

Contractors all risk insurance is project cover. It protects the thing being built and the public around it, for a window that opens at the first consignment and closes at handover or expiry, whichever comes first. Your machines are inside it only through an extension somebody has to buy.

So when the tender condition lands, ask to see the schedule rather than the certificate, check whether plant is extended in, and hold your own plant and machinery policy regardless. The two covers answer different questions, and a site only finds out which one it needed after something has already gone wrong.

Reviewing what your own fleet is covered for? Start with the equipment insurance options and read the note on why equipment insurance claims get rejected before your next renewal, because most declined claims trace back to a term agreed at inception.

Policy wordings, extensions and excess levels differ between insurers and between projects, and nothing here is a substitute for the schedule you are actually buying. Confirm the scope, the period and the plant position in writing with your insurer or broker before you rely on any cover. Rates, schemes, specifications and prices change — confirm current terms with the OEM, dealer, bank or insurer before deciding.