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Business Interruption And Contractors All Risk

Business interruption insurance which is also known as business income insurance covers the loss of income that a business suffers after a disaster (fire or natural disaster, war or national curfew) while its facility is either closed because of the disaster or in the process of being rebuilt after it. It compensates you for loss of revenue after a loss and makes immediate cash advances to help you restart your business. It also provides cover to reach the profit you would have earned if the loss had not occurred. Some companies add this as additional benefit when you purchase their business property insurance policy. In any case of your business being interrupted, these are the benefits you get if you purchased a business interruption insurance policy.

The following are typically covered under a business interruption insurance policy:

  • Burglary Insurance policy
  • Limited Fidelity Guarantee & Money Cover
  • Business Interruption due to fire and special perils policy
  • Expected profits to be earned during the business interruption.

This coverage is supposed to run from the start date of the interruption until the end of the interruption period where the damage has been fixed unless stated otherwise in the policy. This policy also has additional benefits where a business can purchase business interruption policy for contingency reasons.

Contractors All Risks (CAR) Insurance

This era of democracy has seen and has brought about a lot of construction works which include the building of public and private houses, roads, bridges, hospitals, drainage, fly-over, schools, oil and gas pipelines, etc. Construction of these structures always comes with a lot of risks from construction materials, construction activities, climbing, lifting or handling of heavy and tall objects or machinery by employees in the project contract, etc. For these reasons, it is pertinent to have a type of insurance known as Contractors All Risks (CAR). This is a package policy that provides indemnity to the insured against loss or damage to the contract works, the insured’s plant and machinery and liability to third parties in respect of death, bodily injury or property damage during a project. Most construction project contractors take on this policy to protect the tools, equipment, workers, suppliers of materials and equipment and the immediate materials used in the construction project. This policy may sometimes include a third party liability consulting from taking a part in the contract. Bodily injury, death or loss of personal effects belonging to employees or workers at the project site is covered in the third party policy.

Requirements for obtaining a contractor’s all risk policy

Most insurance companies require some basic information from the company applying for contractor’s all risk insurance. They are:

  • Value of the construction work
  • Cost of the entire project
  • Cost of the machinery and plants used for the construction
  • Limits of liability for public liability companies
  • Other relevant documents as may be deemed necessary by the insurance company


It is compulsory to purchase this type of business insurance policy before the commencement of project work. However, there are certain events excluded in the policy which may vary with different insurance providers. These exclusions are:

  • Cost of repair or replacement of work materials
  • Normal wear and tear of equipment due to usage
  • Damage of construction work due to bad or faulty design
  • War or civil unrest or terrorist actions
  • Loss or damage due to negligence
  • Intentional destruction or willful act

Some companies may include more clauses to the above mentioned ones, therefore it is very important to read the policy thoroughly and understand all involvements and exclusions before purchasing the policy to avoid unnecessary friction during time of claims.

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