Category: Contracts & management
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
Contractor's all risks insurance covers the works and materials on site against fire, flood, theft and accidents during construction, and usually includes third-party liability. The contract requires it for at least the value of the works, for the construction period and the defects period.
Why it matters on a project
It protects both parties from a large loss the project cannot absorb, and is usually required before the advance payment or the start of work.
Common mistake
Insuring for less than the contract value or letting the policy lapse before handover, so a claim is refused after an incident.
Frequently asked questions
Who pays the premium?
Usually the contractor, priced within preliminaries.
Does it cover workmanship defects?
It covers damage caused by an accident; repairing the defect itself is usually excluded.
Related terms
- FIDIC contractsInternational standard forms of engineering contract defining rights, notices, claims and change management.
- Performance bondSecurity the contractor gives the owner against failure to perform.
- Advance paymentAn amount paid to the contractor at the start and recovered from payments.
- Defects liability periodThe period after handover during which the contractor must repair defects at its own cost.
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