What is contractors’ all-risk insurance?

Construction projects rarely go exactly to plan. Whether it’s unexpected damage to materials, equipment theft or an injury onsite, plenty of things can go wrong, and when they do, the costs can quickly add up. That’s where contractors’ all-risk insurance comes in.

So, what is contractors’ all-risk insurance exactly, and why should every contractor or site manager should seriously consider it? At Veriforce CHAS, we’re here to break it down in layman’s terms.

Why does insurance matter on construction sites?

Construction sites are ever-changing environments with multiple trades working simultaneously. Equipment is constantly on the move, structures are being built or altered, and weather or ground conditions can change unexpectedly.

Accidents and damage are likely to occur at some stage during a project, and the financial consequences of even the smallest delay or repair job can be substantial. Materials may need replacing, hired equipment may be unusable, or work might grind to a halt while liability is established.

Contractors’ all-risk insurance can act as a financial backstop, keeping projects on track when the unexpected happens.

What is contractors’ all risk insurance?

Contractors’ all risk insurance (sometimes abbreviated to CAR insurance) is a specialist type of policy designed to protect those involved in construction work, whether that’s the main contractor, subcontractors or site owners.

Unlike standard liability cover, which usually focuses on third-party claims, CAR insurance is broader. It provides comprehensive protection for:

• The project itself (the contracted works)
• Construction materials and tools on site
• Temporary buildings, scaffolding and site equipment
• Third-party injury or property damage

In simple terms, it’s there to cover damage or loss that could arise during the construction phase, including accidental damage and unpredictable events such as fire, flood or vandalism.

It’s called “all risk” because it covers most types of damage or loss unless something is specifically excluded (so it’s always worth double-checking your policy).

Related reading: Risk identification: Techniques to spot and address business risk

Who needs contractors’ all-risk insurance?

What does contractors’ all-risk insurance cover?

Here’s a breakdown of the typical components of a CAR policy:

1. Contract works

This is the main part of the policy. It covers physical damage to the work you’re doing, whether that’s a half-built wall, completed roofing or installed fixtures. If something happens before the job is signed off (and responsibility is handed over), CAR insurance can cover the cost of repairing or redoing the work.

2. Plant and machinery

CAR insurance often includes cover for equipment used onsite, both owned and hired. For example:

• Excavators and dumpers
• Scaffolding and hoists
• Cement mixers
• Lifting gear

This ensures that if a machine is stolen or damaged mid-project, you’re not left footing the replacement or repair bill.

3. Tools and materials

Construction tools, including handheld and power-operated varieties, are costly and often targeted by thieves. CAR insurance can cover these items while onsite in transit or temporarily stored.

Materials, such as timber, tiles or insulation, are also covered while they’re waiting to be used.

4. Third-party liability

Many policies bundle in public liability, but sometimes it’s an optional add-on. It’s well worth including in your policy as it can protect you from claims if someone is injured or property is damaged as a result of your work. This may include:

• A member of the public tripping over your tools
• Damage to a neighbour’s property during excavation

What isn’t covered in a CAR policy?

As with any insurance policy, there are exclusions. Contractors’ all-risk insurance won’t typically cover:

• Wear and tear or poor workmanship
• Deliberate acts of negligence
• Existing structures not part of the current works (unless specified)
• Consequential losses, such as lost profits or delayed payments (unless agreed).

It’s always important to read the small print, particularly if you’re working on complex or multi-phase projects. A good broker or compliance partner, like Veriforce CHAS, can help ensure your policy matches your risk profile and meets client expectations.

How much does contractors’ all-risk insurance cost?

There’s no one-size-fits-all cost, and premiums are influenced by:

• Size and type of project
• Value of contract works
• Location and site risk level
• Security measures in place
• Claims history.

Small domestic projects may see premiums of a few hundred pounds, while large commercial builds may run into thousands. The key is to balance affordability with adequate protection.

Why clients and principal contractors value CAR insurance

Increasingly, having contractors’ all-risk insurance is seen not just as a safety net but as a sign of professionalism. Principal contractors or project managers may require proof of insurance before letting subcontractors onto the site.

Some clients may even build it into tender requirements to:

• Ensure continuous progress, even after an incident
• Minimise legal wrangling over who’s responsible
• Reduce the risk of uninsured losses mid-build.

For subcontractors, presenting a valid CAR policy at a tender stage is a competitive advantage.

Legal requirements vs. best practice

Contractors’ all-risk insurance isn’t legally mandatory in the UK, but in many cases, it’s commercially necessary. If a project contract requires it (as many do), failing to take it out can leave you in breach and financially exposed.

Similarly, if your work involves collaboration with other contractors under CDM (Construction Design and Management) Regulations, having CAR insurance in place shows you’re taking health and safety obligations seriously. This can tie into broader compliance strategies, including those supported by Veriforce CHAS certification.

How to choose the right policy

When selecting your policy, consider the following steps:

1. Assess your risks: what could realistically go wrong on your projects?
2. Determine the cover you need: focus on contract works, tools, plant and liability.
3. Review exclusions and limits: ensure the policy fits the scope of your activities
4. Get expert advice: work with brokers or compliance consultants who understand the construction sector.

Some organisations choose to work with third-party specialists to ensure that insurance, safety procedures and compliance are aligned. Certification schemes like Veriforce CHAS can help businesses demonstrate due diligence in this area, building client trust and simplifying procurement.

Related reading: Risk handling strategies: how to mitigate and manage uncertainty

Contractors’ all-risk insurance is a safeguard against damaged work, stolen tools, unpredictable setbacks and financial uncertainty.

In an industry where margins are tight, and deadlines are critical, CAR insurance gives construction professionals the peace of mind that, if the worst happens, they’re protected. It doesn’t just secure your finances, it helps you maintain progress, reputation and compliance.

Whether you’re a small subcontractor or managing a multi-million-pound build, reviewing your insurance arrangements should be a key part of your site planning process. With the support of industry-recognised compliance schemes like Veriforce CHAS, you can ensure your risk management strategy meets modern standards and client expectations.

Need help navigating your health and safety responsibilities or meeting client compliance standards? Get in touch today to find out how our expert support, certification services and risk management tools can help your business stay protected.