Contractors' All Risks  Insurance Blog Image

Contractors' All Risks Insurance

13 October 2022

The growth in global development has led to an unparalleled increase in the value of property risks, also in the development of new risks that were not known before, and the insurance market in Egypt and the Arab world is like any other local or global market, insurance companies have tried to pursue that rapid development that occurred in industrial and urban activities from During the issuance of engineering insurance policies, specifically, and insurance documents for all risks of contractors, such as insurance resulting from machine failure, insurance of loss of profits resulting from the breakdown of these machines, insurance of downtime, insurance of additional expenses, rental insurance and rental value with the calculated rent difference and another such type of insurance that covers indirect losses faced by urban and industrial companies; Let's find out together about the insurance of the policy of Contractors' All Risks Insurance.

What is the insurance policy for Contractors' All Risks Insurance and their features? 

This type of insurance covers all the risks of contractors and all the losses that occur in civil engineering projects, including architectural ones, by issuing various coverage documents to the contractor to cover such dangers as fire hazards, theft, civil liability, and other risks to cover all these risks, to show us the advantages of this type of insurance, including

  • To protect the future of contractors from the risks that could threaten their physical stability by meeting those potentially significant risks, in case they do not have any insurance against the risks that they could face.

  • Achieving the principle of cooperation between several contractors exposed to the same risks, and ensuring the stability of their future by sharing the risks that they can face.

  • Contractors ' risk insurance studies the causes of the risk, develop, and takes appropriate measures to avoid and treat each type of risk, providing safety and Prevention.

  •  It compensates for those losses that the entities are exposed to as a result of the occurrence of any risk, which would preserve the wealth of those businesses and the entity.

Businesses that can be insured

Contractors' All Risks Insurance covers all engineering aspects of insurance, whether architectural, Civil, Mechan or electrical, and the most important works traded in contractors' risk insurance are:

1.  Insurance is possible in all construction and contracting works of all kinds, including building contracts, agricultural contracts, land reclamation, irrigation apartments, and water drains.

2.  Insurance of all installation risks for Engineering, Electric, al, and mechanical devices.

3. Insurance for all malfunctions of productive machinery and equipment in the contracting sector.

4.  Insurance of computers and devices used in the field of contracting.

Contractors' All Risks Insurance has completely different characteristics from those of other insurance, as the balance in this type of insurance is relative to a certain extent, due to the expansion of that insurance coverage, such as duration, volume, and quality as well.

Required data

Engineering insurance contains a set of required data that must be available for the insurance process to take place properly, we explain it as follows:

  •  The name of the client/ owner of the project.

  • The name of the main contractor and the sub-article, if any.

  •   Contract value (is the estimated value of business contracts).

  •  The term of the contract with an indication of the expected start date.

  •   Indicate the scope of the business and the location of the work.

  •  The limit of compensation required for third-party insurance.

  •   A copy of the terms of the insurance contract, if any.

In the case of large projects whose budget is expected to increase by more than 25 million US dollars, it is necessary to send some additional data in addition to the above-mentioned data, namely:

  •  Send the executive plan/ detailed project statement.

  •   Submit the schedule (bar chart) of the project.

  •  Send the location report, also plans, drawings, etc.

The main sections of the document.

The insurance cover for all risks of contractors is divided into two main parts, which are as follows:

The first section:t his section contains those dangers that fall under the name of force majeure and that cannot be controlled because they are subject to natural and environmental factors that are difficult to control, as it is possible to work to reduce the damage caused by these natural disasters represented by rains, storms, winds, earthquakes, floods and other such dangers.

The second section: This section contains those hazards that occur as a result of those factors that can be controlled and managed technically, such as total or partial subsidence, lateral movements of the soil, negligence, theft, fire, Technical Hazards, and civil liability hazards.

General exclusions in insurance for all risks of contractors

Despite the concept of this comprehensive insurance and the designation of B insurance for all risks of contractors, there are of course many exceptions to his type, and they vary from country to country, so you should return to the insurance company in your country into top all exceptions from Contractors' All Risks Insurance. These exceptions can be broadly divided into many countries

1. Those damages that cause losses, whether direct or indirect, due to military activities such as wars and civil revolutions, as well as terrorist activities and the resulting sabotage, riots, and chaos, and those acts that destabilize, in addition to the damage caused by atomic reactions and nuclear activities and the danger of reactive radiation, as well as the confiscation of funds for sovereign reasons, these types exclude Completely out of insurances.

2. Those damages that cause losses due to technical malfunctions, whether electrical malfunctions or mechanical malfunctions, in addition to damages that occur due to negligence and non-use, in addition, those works that are carried out randomly and are not by the applicable construction rules, or those damages resulting from work stoppage, these types are completely excluded from construction insurance.

3.  As well as damages that cause losses due to negligence in keeping documents and files, as well as maps and documents, in addition to those damages to structural building materials discovered due to periodic inventory, in addition to the cost of modifying erroneous designs, and the cost of maintaining defective structures, in addition to those losses that affect machines on the roads that are held outside the construction site, as well as everything related to By the contractor from penalties and dependencies, these types are completely excluded from construction insurance.

4. Finally, an exception is made for those accidents that occur to machines near or far outside the construction site and also excludes the insurance liability of these employees or employees of the insured(insurance liability)in addition to that liability that was made in the form of an initial agreement, unless the final liability falls on the insured.

The grounds for settling losses in the event of losses

Losses in the insurance of Contractors' All Risks Insurance can be classified into:

material losses are the losses that affect engineering projects, so the insured's funds and property are damaged at the time of construction and implementation.

Profit losses: profit losses can be divided into two parts:

1.  Loss in investment: it means the kind of losses that the insured suffers as a result of not managing construction projects well, such as not delivering the work on time.

2. Production loss: it represents those losses that the insured suffers as a result of not being able to secure the production capacity necessary to complete construction projects, or in connection with those losses in construction work tools.

3. Losses that affect the other person (third party): this loss is represented in the civil liabilities for which the insured is judicially liable to the third party as a result of the implementation of his actions, whether that loss is in property or persons.

Insurance costs

The insurance premium is calculated based on a percentage per thousand of the total contract value so that its composition corresponds based on the:

Through a set of criteria, we can determine the insurance costs, which are represented in the type of work that has been contracted, as well as the type and nature of the project, also a clarification of the total period of implementation and delivery of the project, and a statement of the experience of the contractor based on the project, in addition to clarifying the From the participation of employees in the value of compensation, also clarify the insurance liability.

Insurance premium calculation

The premiums in this type of insurance can be calculated by measuring the type of risk covered by the type of insurance, in addition to the total value of the insured projects at the time of implementation, taking into account the nature of the project and the maximum compensation limit, as well as clarifying the procedures followed in the security and safety of the project, with a statement of all expenses of the insured accident.

The contributions ( premiums ) are calculated based on a percentage per thousand of the insured's total insurance value ( compensation coverage ceiling).

Brokerage Insurance provides you with all the Engineering Insurance services like Erection All Risk insurance policy and Contractors' Plant Insurance