Although a CAR policy may be taken by the principal or by the contractor, but usually, under the terms of the agreement between the contractor and the principal, it is obligatory on part of the contractor to effect a CAR insurance in their joint names before the commencement of the project.
The sum insured under the policy must not be less than the full value of the contract works at the completion of contract inclusive of all materials, wages, freight, custom duties, construction cost and material or items supplied by the principal.
Type of Projects
The CAR insurance policies generally issued for all types of Civil Engineering projects like dwellings, office building, commercial building, go downs and warehouses, hospitals, schools, silos, steel structure, roads, water supply lines, construction work, etc.
Extension of Cover
While the standard policy include all Acts of God perils, it has to be noted that the earthquake peril is covered at an appropriate additional premium as per the erection tariff.
Extension of basic cover to provide for extension of the policy period itself can be given at additional premium per erection tariff.
Dismantling cover in case of already erected second hand plant can be given at an appropriate additional premium as per tariff.
Additional premium are also chargeable for the removal of debris, contractor’s plant and equipment, third party liability, if they are to be included in the sum insured.
Material Damage Section
The Scope of insurance is virtually the same as that of EAR insurance. Under this section the insurer agreed to indemnify for any loss or damage to the insured property by any cause other than those specifically given under the exclusions.
The various exclusions under the CAR policy:
General exclusions (applicable to Section I and Section II).
Exclusions applicable to Section II - Third Party liability.
Exclusions applicable to Section I - Material Damage are exactly the same as under EAR Policy.