Contract Works Insurance (CAR)
CAR protects construction projects - buildings, bridges, roads, dams and similar works - against accidental physical loss or damage during construction and the agreed maintenance period. IC-88 questions often test what is included in the contract value and what is outside the CAR scope.
Core rules
- The sum insured should reflect the completed contract value, including materials, labour, freight, overheads and any escalation; underestimation creates average or a shortfall.
- CAR covers permanent and temporary works, materials on site, and often off-site materials if endorsed. It does not automatically cover contractor’s plant, construction machinery or existing property.
- Third-party liability is an important extension, usually with a separate limit and deductible.
- Common exclusions: defective design/material/workmanship, wear and tear, corrosion, subsidence/landslide unless endorsed, war/nuclear risks, penalties and consequential loss.
- Maintenance-period cover responds to damage caused during maintenance, often for the contractor’s operations rather than unrelated wear.
Worked example
A road contractor insures a ₹20 crore contract, including ₹1 crore of employer-supplied materials. A landslide damages a completed embankment. If landslide is excluded and not endorsed, there is no CAR indemnity even though the loss is accidental. If landslide is endorsed subject to a deductible, the surveyor assesses the reinstatement cost and pays the covered amount less the deductible, within the sum insured.
Traps
Do not add contractor’s plant to CAR automatically. Do not ignore employer-supplied materials. Do not assume all “accidental damage” is covered when a named peril exclusion applies. Do not overlook the maintenance period and its separate conditions.