the insurer's CAR Insurance is India's most widely used construction insurance policy — protecting civil construction projects from the day the first consignment arrives on site until completion and handover. Section I (Material Damage — all risks basis) and optional Section II (Third Party Liability). Principal, Contractor, Sub-contractors — all insurable in one joint policy.
the insurer Engineering· 3rd Engineering Product· India's Most Used Construction Policy
CAR Insurance is India's most widely used construction insurance policy — protecting every civil engineering project from the moment the first consignment arrives on site until completion and handover. Written on an all-risks basis, every peril is covered UNLESS specifically excluded.
Every peril covered unless excluded. Burden of proof on insurer, not insured. Broadest possible coverage for civil construction.
All Risks — Not Named PerilsPhysical loss/damage to contract works, materials, temporary structures, and construction plant — from Day 1 of first consignment to handover.
4 Risk CategoriesLegal liability for bodily injury/death and property damage to third parties from construction activities. Defence costs included.
Optional· Standard on All ProjectsPrincipal, Main Contractor, Sub-contractors — all covered under one joint-name policy. Eliminates coverage gaps and inter-party disputes.
Joint Names AllowedExtended Maintenance Period cover — up to 5 years post-handover for government bridge, road, and major infrastructure contracts. Longest DLP in the series.
Longest DLP in SeriesCross Liability, 50:50 Clause, Put to Use, Debris Removal, DLP Extension, Professional Fees — the most add-on covers of any product in the 50+ series.
Most Add-ons in SeriesSection I — Material Damage· Section II — Third Party Liability· 3-Stage Coverage
CAR is structured into Section I (what happens to YOUR construction project) and Section II (what your project does to OTHERS). Both run from the same policy inception to the same expiry or project handover date.
From a ₹1 Crore Home to a ₹10,000 Crore Dam
"A Contractor's All Risk Insurance Policy basically covers the construction of civil works.".co.in. Every project where civil construction work exceeds 50% of total project value is a CAR project.
Apartments, housing complexes, villas, townships. PMAY (3 crore homes). DLF, Godrej, Prestige, Sobha projects.
Shopping malls, multiplexes, office towers. Phoenix Mills, DLF Malls, Embassy Business Parks. Interior decoration CAR is a separate policy.
Factory sheds, warehouses, godowns. PLI scheme manufacturing facilities. Civil portion of industrial projects — paired with EAR for mechanical.
NHAI highways, state PWD roads, expressways, PMGSY rural roads. NHAI requires CAR + Performance Bond before work begins. 50+ km/day being built.
River bridges, road flyovers, rail overbridges, viaducts. Long DLP periods — government bridge contracts often require 3–5 year DLP.
Road tunnels (highway mountain sections), metro underground sections, water supply tunnels. Highly specialist — wet works, soft ground TBM operations.
Large dams (NHPC, SJVNL), irrigation reservoirs. Very long project periods (5–10 years). Catastrophic risk from partial dam failure during construction.
Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), state irrigation departments. Long linear infrastructure. Flood risk highest for canal projects.
Govt hospitals (AIIMS expansion, new medical colleges), private hospital chains, universities, schools. PMAY + Ayushman Bharat health infra projects.
Airport civil construction (T3 IGIA, CSIA, new Jewar, Navi Mumbai, Dholera). Port construction, jetties, breakwaters. AAI and AERA contracts require CAR.
Smart City Mission projects, sewage treatment plants (civil), water supply networks, metro-rail elevated structures, bus rapid transit corridors.
"Once the building is complete, interior decoration work which is a sizeable amount is supposed to be completed. And, for that you need to have a SEPARATE CAR policy.". Premium malls, hotels, corporate HQs.
Construction Industry = 9% of India's GDP· 2nd Largest Employer
CAR is needed by everyone with a financial stake in a civil construction project. "Construction firms and financiers involved in construction projects commonly request it.". In many cases it is not optional — it is a contractual requirement.
The party doing the construction work. Contractually obligated to arrange CAR in most government and large private contracts. Named as principal insured or co-insured alongside the project owner.
Real estate developers, housing boards, infrastructure developers. Their investment is ₹crores — uninsured construction loss can wipe out project returns. Often arranged as joint-name policy with contractor.
NHAI, NMMC, CPWD, NHPC, NTPC, Railways, AAI, Port Trusts — all require CAR in their EPC contracts before work commences. No CAR certificate = no work order.
Hybrid Annuity Model (HAM), BOT-Toll, DBFOT contracts — all standard PPP models require CAR. The SPV formed for PPP projects arranges CAR in joint names of all consortium members.
MEP contractors, façade contractors, civil sub-contractors — named in the main CAR policy as co-insured. Cross Liability Cover is critical when multiple sub-contractors work simultaneously.
Banks and NBFCs that funded construction. Their loan is secured against the project — if uninsured construction loss occurs, the collateral is destroyed. Mortgage Clause / Lender's Interest noted in CAR policy.
Project Management Consultants (PMCs) and architects overseeing construction sometimes arrange CAR with Professional Fees extension — covering their reinstatement fees post-loss as part of the project cost.
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CAR has 12 optional add-on covers — confirmed from.co.in (India's most comprehensive CAR policy guide). This is the largest number of optional extensions in the entire 50+ product series. Three are featured as universally essential. Two are unique to CAR (50:50 Clause, Put to Use Clause).
Costs of demolishing and removing debris of damaged/destroyed property insured under Material Damage Section. Debris removal after a structural collapse or flood can equal 15–25% of the reconstruction value. NOT included in base policy — must be added. For any project in a built-up area, debris removal is non-negotiable.
"Many times, the principals make them responsible to maintain the project for a period of 6 months, 1 year, 2 years and sometimes for a period as high as 5 YEARS.".co.in. Covers loss caused by contractor during maintenance AND latent defects from construction phase. Government road: 5-year DLP. Bridge: 3–5 years. Residential: 1–2 years. Always add if your contract has a DLP clause.
"Extends the Third-Party Liability Cover to cover subcontractors as if a separate policy has been issued to each party.".co.in. Example: On a large housing complex, the civil contractor's crane damages the MEP contractor's electrical installation. Without Cross Liability → court case. With Cross Liability → settled under CAR policy with no litigation. Essential for any project with 2+ contractors working simultaneously.
"Used when it is not clear whether the damage occurred during the Transit Stage (Marine policy) or during the Construction Stage (CAR policy).".co.in. Loss shared equally between Marine Insurance and CAR Insurance. Critical for imported components arriving by ship — if a 50-tonne steel girder is found damaged after delivery, was it damaged at sea or after unloading? 50:50 Clause resolves this without investigation. Requires 50:50 clause in BOTH Marine and CAR policies.
"Covers loss or damage to parts of the insured contract works taken over or put into service if such Loss or Damage emanates from the construction of the items insured under Section I.".co.in. Essential for phased projects: a 5-tower housing complex where Towers 1–2 are handed over while Towers 3–5 are still under construction. If Towers 3–5 construction damages handed-over Tower 1 — Put to Use Clause responds. NOTE: Does NOT cover AOG perils (earthquake, flood, storm) on taken-over works.
Fees of architects, surveyors, consulting engineers, structural engineers or other professionals incurred in reinstatement of insured property after an admissible loss. After a major flood or collapse, you need architects to redesign, surveyors to assess, engineers to certify — all at additional cost. Professional Fees extension covers these costs above the construction cost.
"Indemnifies the insured for accidental loss or damage to temporary access roads or other temporary structures if such loss or damage occurs PRIOR TO such roads being completed or taken into use for the intended purpose.".co.in. Once the road is taken into use → out of coverage. Must be declared separately with their own SI value.
"Covers loss/damage to surrounding property of Owner located on project site if damage is caused directly due to Construction or testing of the property covered under the policy." For expansion work in existing premises — new wing being added to an existing building, factory extension. Does NOT cover construction/erection machinery, plants and equipment.
"In the Process of Preventing further loss, if the Insured incurs an additional expense, this additional expense is payable.".co.in. After a storm damages a partially built floor, the contractor places emergency waterproofing, temporary props, and pumping equipment — all costs payable under Loss Minimisation. Covers proactive steps taken to prevent further damage after a loss event.
"Provides an automatic increase in the Policy Sum Insured up to selected % of Sum Insured. Claim settled at increased replacement/reconstruction cost as on date of loss." Premium charged on only 50% of selected escalation. Example: ₹1,000 Cr project with 20% escalation → add 50% of ₹200 Cr = ₹100 Cr to SI; premium on ₹100 Cr; SI automatically increases by ₹200 Cr. Critical for multi-year projects where steel and cement prices rise.
"Covers loss or damage to Project material at the Fabricator's Premises or Workshop by a Peril not excluded under CAR Policy. All fabricator locations must be declared.".co.in. For large infrastructure where structural steel, precast segments, or curtain wall elements are pre-fabricated at manufacturer's facility before delivery to site. Without this, damage at fabricator's yard is NOT covered.
"Provides compensation for Additional Custom Duty incurred than what has been Insured for importing damaged parts at the time of loss." If imported curtain wall or structural steel is destroyed and customs duty has increased since original import, this extension covers the additional duty on replacement. Relevant for large projects with significant imported components.
SI = Estimated Completed Value of Project· All Cost Components
"The Sum Insured under a CAR Policy is the estimated completed value of the Project.".co.in. This includes all cost components: civil works, plant and machinery, freight, customs, labour, and temporary works. Pre-operative expenses (consultants fees, soil testing, site leveling) are NOT included.
⚠️ INDICATIVE ONLY. Pre-operative expenses (technical consultants fees, project financing charges, soil testing, site leveling) must NOT be included. "If the project duration is 3 years, the contractor should declare the total construction cost to be incurred over the duration of 3 years.".co.in. For exact the insurer CAR premium, call 022 4302 0000.
the insurer's Two Sister Engineering Policies· The 50% Civil Works Rule
"CAR is for civil construction. EAR is for mechanical/electrical installation." — confirmed across all sources. The 50% rule provides a clear quantitative guide. Many large projects — power plants, factories — need BOTH simultaneously.
| Feature | 🏗️ CAR — Contractor's All Risk | ⚙️ EAR — Erection All Risk |
|---|---|---|
| Project Type | Civil construction — buildings, roads, bridges | Mechanical/electrical — factories, power plants |
| The 50% Rule | Civil works >50% of total project value | Machinery erection >50% of total project value |
| Key Examples | Residential building, highway, dam, tunnel | Thermal power plant, refinery, solar farm |
| Dominant Risk | Structural collapse, flood, materials theft | Electrical failure, testing phase explosion |
| Testing Phase | Brief structural load tests — minimal risk | HIGHEST RISK phase — most claims by value |
| Settlement Basis | Actual value immediately before loss | Replacement value less depreciation |
| DLP Duration | 6 months to 5 YEARS (longest in series) | 12–24 months typically |
| Cross Liability | ✅ Standard optional add-on | Less commonly needed |
| 50:50 Clause | ✅ Unique to CAR — Marine + CAR split | N/A (not applicable) |
| the insurer Product | CAR Insurance (this page) | EAR Insurance (separate the insurer product) |
A thermal power plant has both: the civil contractor building the turbine hall (concrete structure, foundations, plinths) needs CAR. The mechanical contractor erecting the turbines, boilers, and generators inside needs EAR. For full project coverage, you need both policies simultaneously — CAR for the civil portion, EAR for the mechanical portion. Many EPC contracts in India have a combined or back-to-back CAR + EAR structure. Our team at 022 4302 0000 can structure both policies from the insurer in a single underwriting package.
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CAR is written on an all-risks basis — the exclusion list is shorter and more important than a named-perils policy's coverage list. Key nuance: ordinary NEGLIGENCE is covered. WILFUL negligence is excluded. Faulty workmanship exclusion applies only to the immediately affected item — consequential damage to other items IS covered.
War, invasion, civil war, rebellion, revolution, military operations. Standard across all engineering products. Terrorism extension available — ask the insurer separately.
Nuclear reaction, radioactive contamination, ionizing radiation. Excluded standard across all engineering and construction insurance products globally.
Gradual deterioration, rusting, corrosion, oxidation from regular use or weather over time. CAR covers SUDDEN and UNFORESEEN physical loss — not gradual material degradation.
"Loss discovered at the time of taking inventory." Stocktaking discrepancies — missing materials found during inventory count — are excluded. Physical accidental loss is covered; administrative shortages are not.
IMPORTANT NUANCE: ORDINARY negligence IS covered (workers' mistakes, careless handling). WILFUL negligence — deliberate recklessness — is excluded. The distinction matters in claims assessment.
KEY NUANCE: Excludes the IMMEDIATELY AFFECTED ITEM ONLY. If a faulty weld causes a structural collapse that damages adjacent completed work — the adjacent work's damage IS covered. Only the faulty item itself is excluded.
Loss of revenue, loss of profit, project delay penalties, liquidated damages, contract penalties. A separate Advance Loss of Profit (ALOP) / Delay in Start-Up (DSU) policy covers consequential losses.
Loss arising from stoppage of work — whether total or partial. If the project is abandoned, halted, or suspended by the insured, losses from that stoppage are not covered.
"No policy covers damage to crops, forests, and other cultivated areas during construction." — GoInsure. If a highway project damages adjacent farmland, the crop loss is excluded.
"Loss of or damage to files, drawings, accounts, bills, currency, stamps, deeds, evidence of debt, notes, securities, cheques, packing materials." Project records and administrative documents are excluded.
Accidents caused by vehicles that ply on roads, water, and air. Motor insurance covers road vehicles, marine insurance covers watercraft. CAR covers the project site — not the transport infrastructure.
"Insured must trace the exact position of underground cables before work starts. Indemnity is limited to repair costs only." — GoInsure. Cable damage IS covered but only repair cost, and only if insured did due diligence to locate cables first.
After a Construction Incident — Act Immediately
From.co.in: "Once the Insured Property has been damaged, the Insured needs to follow the below steps to file a claim under a CAR Policy." Immediate notification, surveyor cooperation, and comprehensive documentation are the three pillars of a successful CAR claim.
"Insured should intimate the claim as soon as possible to the Insurance Company.".co.in. Contact the insurer or Probitas (022 4302 0000) immediately after the incident. Provide: Date, time, and location of damage; Loss or damage to assets; Brief description of the accident. Register the claim to start the process.
"The Insurance Company appoints a surveyor who visits the affected site for investigation.".co.in. Do NOT commence major repairs before the surveyor's visit for significant claims — preserve evidence. Photograph comprehensively. Provide full cooperation and site access. For minor repairs urgent for safety: document everything first, then proceed.
Submit all required documents: Claim Form, ID Proofs, GST Certificate, FIR (for theft/major incidents), Report of Damaged Assets, photographs, repair estimates from qualified contractors, project schedule (showing damage impact), contract documents (to verify SI). For DLP claims: add maintenance contract showing DLP obligations.
"The Insurance Company assesses the Claim based on Documents submitted and Surveyor Reports. If admissible, the Insurance Company settles the Claim as per CAR Policy Terms.".co.in. Partial loss: Cost of repairs to restore to pre-loss condition. Total loss: Actual value immediately before loss. Average Clause: Proportional reduction if under-insured.
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