Contractors’ all-risk insurance

A practical guide for UK construction in 2025

Contractors’ all-risk insurance, often called CAR, protects a construction project if things go wrong on site or during the build period. It usually combines contract works cover with third-party liability, and can be extended to plant, tools, and temporary buildings. The aim is straightforward - keep the project moving and protect your balance sheet if materials are damaged, works are destroyed, or a third party is injured.

The 2025 UK market is competitive for standard four-walls projects, with some premiums down by as much as 10% due to strong insurer capacity and new managing general agents. This has encouraged broader terms and fewer exclusions for many mid-market placements. However, underwriting remains cautious for high-risk developments like high-rise and complex engineering, where terms can be tighter and pricing flatter. Understanding where your project sits on that spectrum is key to setting realistic expectations.

Financial strain across the sector also matters. Construction insolvencies remain elevated, particularly among specialist subcontractors operating on thin margins. This can trigger claims complexities under the Third Parties (Rights Against Insurers) Act and disrupt live projects. Tool theft continues to rise, especially in urban hotspots such as London, increasing downtime and replacement costs. At the same time, the adoption of BIM and modern methods of construction is changing risk profiles, improving quality control while introducing new considerations such as design coordination and potential cyber exposures.

This guide explains how cover works, what it includes and excludes, how to assess options, and what to check before you buy. We keep it impartial and practical so you can make confident, well-informed decisions for projects across England, Scotland, and Wales.

Insurance can protect your project finances, but only when the cover matches the risks on site.

What is covered and how claims typically unfold

Contract works cover protects the physical works in progress - materials, fixtures, and structures - against sudden and unforeseen physical loss or damage. If a storm damages a partially built roof or a burst pipe ruins finished interiors, the policy can fund reinstatement so work can continue. Third-party liability covers injury to members of the public or damage to their property arising from the works. Many policies can add hired-in plant, own plant, tools, and temporary site structures such as cabins and hoardings.

Policies set out exclusions and conditions that matter. Common limits or exclusions may apply to defective design or workmanship, gradual deterioration, contractual penalties, or pre-existing damage. For complex projects, insurers often apply tighter terms for fire and water damage, hot works, cladding, and high-rise construction. Some risks require specific controls like water mitigation plans, live fire watches, or phased handover procedures.

Claims usually start with notifying the insurer or broker as soon as safe to do so. You will need to provide a timeline of events, photos, site reports, and costings. For theft, proof of forced entry or approved security steps may be required. If insolvency of a subcontractor causes a loss, additional documentation may be needed to validate rights against insurers and keep the project moving. Clear documentation from the outset helps avoid delays.

In practice, cover is there to put the project back to the position it was in before the loss, subject to the policy limit, deductibles, and conditions. Being open about methods, security, and site controls helps ensure fewer gaps and smoother claim outcomes.

Who benefits most from this cover

CAR is valuable for main contractors, developers acting as principal, and specialist subcontractors who are responsible for elements of the works. It suits residential builders benefiting from increased housing demand, as well as commercial contractors working on standard four-walls projects where competitive premiums and wider coverage are available. It is especially useful where project funding or contract terms require evidence of robust insurance to protect lenders and employers.

For very small, low-value works with minimal third-party exposure, it may be more cost effective to rely on public liability and specific tool or plant cover, provided contracts do not mandate CAR. Projects using BIM or modern methods of construction benefit when the policy reflects actual risk controls and digital workflows. If you are delivering high-rise or complex engineering, expect more underwriting scrutiny and take steps to strengthen risk management and documentation before seeking terms.

Picking a cover setup that fits your project

1. Basic - Contract works and public liability

   • Suitable for small to mid-size projects with straightforward construction methods. Covers sudden and unforeseen physical loss or damage to the works, plus third-party injury and property damage. Lower limits and higher deductibles likely, with tighter exclusions on theft and water damage.

2. Standard - Works, liability, and plant

   • Adds own plant and hired-in plant with realistic day-rate or market-value limits, plus improved theft cover with agreed security conditions. Better water damage protection with leak detection controls. Suits most residential and general build projects.

3. Enhanced - Broader cover and fewer exclusions

   • Wider perils, improved limits, and extensions for existing structures, professional fees, and debris removal. Increased policy flexibility for phased handovers and partial occupation where contractually required. Often attractive in the current competitive market for standard builds.

4. Specialist - Complex or high-risk projects

   • Tailored terms for high-rise, cladding exposures, deep basements, or complex engineering. May require multi-carrier placements, detailed method statements, hot works protocols, and watertightness plans. Pricing can be flat or higher compared to simpler builds.

5. Optional add-ons

   • Tools and site security upgrades with minimum standards
   • Non-negligent liability under contract conditions
   • Advanced loss of profits or delay in start-up for developers
   • Environmental impairment liability where sustainability features are material
   • Cyber cover for BIM and digital site management systems

What it costs and why pricing varies

This table shows market patterns, not guaranteed prices. Insurers may adjust terms as capacity and loss trends change.

Can you apply and what insurers may ask for

Most UK contractors, developers, and subcontractors can obtain CAR, provided the works are lawful and appropriately risk managed. Insurers typically ask for contract values, programme dates, site location, construction methods, hot works details, water mitigation plans, security measures, and details of principal and subcontractor responsibilities. Evidence of experience, health and safety records, and claims history is common.

Applications may be declined or restricted where projects involve unremediated cladding risks, inadequate water or fire controls, a history of frequent theft without improved security, or where the proposer has adverse financials such as insolvency risk. Complex high-rise or engineering schemes may require additional surveys, phased terms, or multi-carrier placements. Provide accurate information and keep documents such as drawings, method statements, and subcontractor agreements readily available.

From quote to claim in simple steps

1. Gather project details, values, timelines, and methods with named parties listed.
2. Share risk controls for fire, water, and security, plus BIM or MMC usage.
3. Request quotes via a broker and discuss limits, deductibles, and key exclusions.
4. Compare options, confirm responsibilities under the contract, and select cover.
5. Bind the policy, receive documents, and brief site teams on conditions.
6. Keep records during works and update insurers if scope or values change.
7. If a loss occurs, notify promptly, document evidence, and follow policy steps.
8. Cooperate with adjusters, approve reinstatement, and keep stakeholders informed.

Balanced view of strengths and trade-offs

Key checks before you commit

Before arranging cover, read how deductibles apply to each section, including water damage and theft. Confirm the contract works sum insured reflects current material and labour costs, noting the impact of higher wages and employer NICs. Review exclusions for cladding, hot works, and existing structures, and check any requirements for watertightness tests, live fire watches, and leak detection. Ask how partial occupancy and phased handover are treated. Understand renewal pricing and any subjectivities that must be satisfied before cover incepts. Keep evidence of security standards, subcontractor agreements, and BIM coordination protocols ready for the insurer.

Alternatives and related protections

1. Public liability insurance - For injury or property damage to third parties without contract works cover. Suitable for small, low-risk jobs.
2. Plant and machinery insurance - Standalone cover for owned and hired-in equipment where CAR is not required.
3. Professional indemnity - For design and advice risks, especially with design and build or BIM coordination responsibilities.
4. Latent defects insurance - Post-completion structural defects cover, often required by lenders or warranty providers.
5. Cyber insurance - For projects relying on digital tools and connected site systems.

Frequently asked questions

Q: Is contractors’ all-risk insurance mandatory in the UK? A: It is not a legal requirement, but many construction contracts and lenders require it. Even when not mandated, it can protect project cash flow when unforeseen losses occur.

Q: How are premium levels trending in 2025? A: Standard four-walls projects often benefit from lower rates due to strong capacity and competition. Complex and high-rise schemes see flatter pricing and stricter conditions reflecting cautious underwriting.

Q: Are tools automatically covered? A: Not always. Tools and plant may need to be added with specific limits and security standards. Insurers often require locked storage, tracking, and proof of forced entry for theft claims.

Q: What documentation should I keep for a smooth claim? A: Maintain photos, site diaries, delivery notes, method statements, hot works permits, leak testing records, and security logs. Accurate records help validate the cause of loss and speed up settlement.

Q: Does CAR cover defective workmanship? A: Generally no. Most policies exclude rectifying defective workmanship or materials. Consequential damage to otherwise sound property may be covered, depending on the wording and any applicable defects extensions.

Q: Can BIM or modern methods reduce premiums? A: They can support better terms when accompanied by clear controls and accountability. Insurers look for coordination procedures, clash detection, and change management evidence.

Q: What if a subcontractor becomes insolvent mid-project? A: Insolvency can complicate claims and project continuity. Clear contracts, step-in rights, and evidence for rights against insurers help keep protection in place and reduce disruption.

What to do next

Take stock of your project scope, contract requirements, and risk controls. Compare quotes that reflect location, methods, security, and programme realities. If you are unsure about limits or exclusions, ask your broker to explain them in plain English and provide examples. Move forward only when the cover clearly matches your site and responsibilities.

Important notice

This guide provides general information only and is not personal financial advice. Policy terms, exclusions, and prices vary by insurer and project. Always read your documents carefully and seek professional guidance tailored to your circumstances.