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Builders risk

Builders risk, contractors all risk (CAR), erection all risk (EAR), and contract works insurance

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Builders risk insurance (also known as contractors all risk insurance) is coverage for developers, contractors, and investors involved in construction projects. These policies generally protect against a range of construction-related risks, including damage to works, materials, plant, and equipment, as well as liability for third-party injury or property damage. 

Whether you are an individual investor or representing an organisation, securing dedicated construction insurance is critical to safeguarding your financial interests throughout the project lifecycle.

Why builders risk insurance is important for construction projects 

Construction projects face risks such as:

  • Physical damage from fire, extreme weather, theft, or vandalism.
  • Third-party injury or property damage claims.
  • Design errors, delays, and change requests.
  • Regulatory and compliance challenges.
  • Supply chain disruptions and workforce issues.

Effective construction risk management requires thorough risk analysis and proactive planning. This involves all project stakeholders and includes:

  • Establishing clear safety protocols and documented procedures.
  • Maintaining detailed risk registers to track and mitigate risks.
  • Implementing tailored insurance solutions to cover identified exposures.

Why Marsh?

At Marsh, our construction risk management specialists help you identify the right insurance products and risk mitigation strategies tailored to your project’s unique risk profile, protecting your interests from start to finish.

FAQs

Construction risks include:

  • Physical damage: Extreme weather events, fire, explosions, vandalism, and theft.
  • Third-party risks: Injuries to third parties, damage to third-party property, and environmental impacts.
  • Design risks: Errors, delays, sudden change requests from stakeholders.
  • External factors: Regulatory changes, tax law adjustments, macroeconomic shifts, and adverse public opinion.
  • Compliance risks: Issues such as lapsed permits or incomplete documentation submitted to authorities.
  • Project management and organisational matters: Workforce inexperience, supply chain disruptions, safety hazards, scheduling conflicts, delays, and cost overruns.
  • Contractual risks: Failure to meet quality standards or use of improper materials.

Insurance is essential for protecting against injury and physical damage risks and is typically mandated by construction contracts. Additionally, financial stakeholders often require protection against financial losses, including those arising from certain project delays.

A range of insurance policies may be desirable to address risks related to transit, pollution, design defects, and other specific project activities.

Risk identification, allocation, and management should begin at the earliest stages of a project. 

This involves:

  • Analysing commercial viability and risk allocation among stakeholders.
  • Prioritising risks based on potential size, financial impact, and likelihood.
  • Addressing difficult-to-manage risks through contractual terms and insurance policies.

Integrating risk management from the outset helps protect your investment, minimise unexpected costs, and promote smoother project execution.

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