• By Raymond Momanyi

Contractors All Risks Insurance Kenya | Compare CAR Quotes

Compare Contractors All Risks insurance quotations in Kenya for buildings, roads, renovations and civil engineering projects. Cover contract works, materials, equipment and third-party liabilities.

Construction Projects Carry Serious Financial Risks

Every construction project begins with a plan, a budget and an expected completion date.

But between the first excavation and the final handover, many things can go wrong.

A fire may destroy building materials. Heavy rain may flood excavated foundations. A partially completed wall may collapse. Construction equipment may be damaged. Debris may fall onto neighbouring property, or a member of the public may be injured near the site.

Any of these events can delay the project and create significant financial losses.

Contractors All Risks insurance in Kenya, commonly known as CAR insurance, is designed to protect contractors, developers, property owners and other project stakeholders against sudden physical loss or damage to construction works and certain legal liabilities arising during the project.

The policy normally combines two important sections:

1. Material damage to the construction project.
2. Third-party liability arising from the construction activities.

Official product descriptions from Kenyan insurers define CAR insurance as protection for contract works, materials, construction plant and machinery, together with third-party bodily injury or property-damage claims connected to the works.

What Is Contractors All Risks Insurance?

Contractors All Risks insurance is an engineering insurance policy arranged for a specific construction or civil engineering project.

It may cover permanent and temporary works, construction materials and other insured property against unforeseen physical loss or damage, except for risks specifically excluded in the policy.

The cover can be used for projects such as:

• Residential buildings
• Commercial buildings
• Apartments
• Warehouses
• Schools
• Hospitals
• Roads
• Bridges and flyovers
• Water tanks
• Sewage-treatment plants
• Dams
• Drainage works
• Renovations
• Building extensions
• Civil engineering works

Pacis describes CAR as an all-risks policy for building and civil engineering projects, including new buildings, repairs and alterations, road works and dams. Britam also identifies buildings, water tanks, sewage-treatment plants, flyovers and airports as examples of projects commonly insured under CAR policies.

Who Should Purchase CAR Insurance?

The policy may be arranged by any party that carries a financial or contractual interest in the project.

This may include:

• The principal or project owner
• The main contractor
• Property developers
• Building contractors
• Road contractors
• Civil engineering contractors
• Subcontractors
• Financiers
• Joint-venture partners
• Government contractors
• Institutions undertaking construction
• Employers commissioning major works

In many contracts, the project owner requires the contractor to provide evidence of Contractors All Risks insurance before taking possession of the site or commencing the works.

The policy can be structured to include the interests of the principal, contractor and subcontractors under one project arrangement. Pacis states that the policy may be arranged by either the project owner or contractor and can include subcontractors involved in the works.

The Two Main Sections of Contractors All Risks Insurance

Section One: Material Damage

The material-damage section protects the insured construction works and specified property against sudden and unforeseen physical loss or damage.

Property insured may include:

• Permanent works under construction
• Temporary works
• Construction materials
• Materials supplied by the project owner
• Site structures
• Formwork
• Scaffolding
• Construction plant
• Machinery
• Tools and equipment
• Debris-removal expenses

Britam describes this section as covering physical loss, destruction or damage to insured property resulting from causes not specifically excluded. First Assurance similarly describes CAR as protection for contract works, construction plant and machinery.

Section Two: Third-Party Liability

This section addresses the contractor’s legal liability to members of the public.

It may apply where construction activities cause:

• Bodily injury to a third party
• Death of a third party
• Damage to neighbouring property
• Damage to public utilities
• Damage to vehicles
• Damage caused by falling objects
• Damage arising from excavation or vibration
• Injury caused by unsafe access around the project

Liberty explains that CAR may extend to the contractor’s legal liability for injury, death or property damage suffered by members of the public due to the contractor’s negligence.

What Risks Can CAR Insurance Cover?

Subject to the policy wording and selected extensions, CAR insurance may cover sudden and unforeseen loss arising from risks such as:

• Fire
• Explosion
• Lightning
• Flood
• Storm
• Earthquake
• Landslide
• Collapse
• Burglary
• Theft
• Malicious damage
• Accidental impact
• Damage caused by construction activities
• Damage to temporary works
• Damage during renovation
• Damage to materials stored on site
• Third-party bodily injury
• Third-party property damage

Liberty’s product description specifically lists fire, burglary, floods, earthquakes and unforeseen accidental damage among the risks that may fall within the scope of cover.

“All risks” does not mean that every imaginable event is automatically covered. It means that sudden and unforeseen physical damage is broadly insured unless the cause or type of loss is excluded.

Cover for Contract Works

Contract works are the permanent and temporary works being completed under the construction contract.

This may include:

• Foundations
• Structural works
• Walls
• Roofing
• Finishes
• Drainage
• Roads
• Temporary access structures
• Site offices
• Formwork
• Materials intended to become part of the completed project

The insured value should reflect the full project cost, including materials, labour, transport, duties and other amounts required to reinstate the works following a covered loss.

Construction Materials on Site

Materials waiting to be incorporated into the building may represent a significant part of the project’s value.

These may include:

• Cement
• Steel reinforcement
• Timber
• Roofing materials
• Glass
• Electrical materials
• Plumbing supplies
• Tiles
• Doors
• Windows
• Imported fittings
• Mechanical equipment

The proposal should clearly identify whether materials belong to the contractor, the project owner or another supplier.

Storage conditions and site security may affect the insurer’s acceptance terms, especially where theft-prone materials are involved.

Contractors’ Plant and Machinery

Construction sites may use equipment such as:

• Excavators
• Cranes
• Concrete mixers
• Compactors
• Loaders
• Bulldozers
• Generators
• Compressors
• Pumps
• Hoists
• Scaffolding systems

Some CAR policies can include plant and machinery used at the project site. Other insurers may require separate Contractors’ Plant and Machinery insurance, particularly for mobile, high-value or frequently relocated equipment.

Britam and First Assurance both identify contractors’ plant and machinery as an important engineering-insurance component. Pioneer’s Mjengo Care also separates Contractors All Risks from Contractors’ Plant and Equipment within its combined contractor solution.

Debris-Removal Costs

After a major insured loss, damaged materials may need to be demolished, cleared and transported away before reconstruction can begin.

Debris-removal expenses can be insured within an agreed sublimit.

This benefit is important because the cost of clearing a collapsed or fire-damaged structure may be substantial, even before rebuilding begins.

Liberty and Britam both identify debris removal as an available CAR benefit or extension.

Surrounding Property

Construction work can damage buildings or property already owned by the project principal.

For example:

• Excavation may damage an existing boundary wall.
• Renovation may affect occupied sections of a building.
• Vibration may damage adjacent structures.
• Construction machinery may strike an existing installation.

An owner’s surrounding property extension can be added to cover specified existing property belonging to the principal, subject to a declared value and policy terms.

Britam lists owner’s surrounding property among the extensions available under its CAR insurance.

Cross-Liability Cover

Large projects may involve several contractors and subcontractors.

A cross-liability extension can allow the liability section to treat insured parties as though separate liability policies had been issued to them, subject to the overall policy limits and exclusions.

This may be useful where one insured contractor causes covered injury or property damage to another insured project participant.

Cross liability is among the available CAR extensions listed by Britam.

Overtime, Express Freight and Air Freight

Following a covered loss, the contractor may need to import replacement materials quickly, work overtime or use express transport to reduce delays.

CAR insurance may be extended to cover agreed additional expenses relating to:

• Overtime
• Night work
• Express freight
• Air freight
• Additional customs duty

These extensions must normally be selected in advance and insured within stated limits. Britam identifies each of these as potential CAR extensions.

Escalation of Construction Costs

Construction costs can increase during the project because of:

• Inflation
• Currency movements
• Increased material prices
• Labour-cost increases
• Changes in import expenses

An escalation clause allows the insured project value to increase within an agreed percentage during the policy period.

Without an adequate escalation provision, the project may become underinsured before completion.

Does CAR Insurance Cover Employees?

Not ordinarily.

Contractors All Risks insurance primarily covers property damage and third-party liabilities. Employees working on the construction site are generally not treated as members of the public under the third-party section.

Contractors should arrange WIBA insurance for employees, as required by Kenya’s work-injury framework.

Liberty states clearly that employees are not covered by its CAR policy and that contractors require WIBA protection for employee injury or death arising from work.

A contractor may also consider:

• WIBA Plus
• Group Personal Accident
• Employers’ Liability
• Group Life
• Group Medical Insurance

Does CAR Insurance Cover Project Delays?

Standard CAR insurance does not normally cover:

• Contractual penalties
• Liquidated damages
• Failure to meet the completion date
• Loss of the contract
• Loss of expected profit
• Poor performance
• Ordinary cost overruns

Liberty’s product information states that penalties, lack of performance and project-delay losses are not covered under the standard CAR policy. A performance bond may be required separately to guarantee contractual performance.

Large projects may consider Delay in Start-Up or Advanced Loss of Profits insurance, where available, to address specified financial losses caused by delayed completion following insured physical damage.

Contractors All Risks Versus Performance Bond

These products serve different purposes.

Contractors All Risks Insurance

CAR protects against covered physical loss or damage to the project and certain third-party liabilities.

Performance Bond

A performance bond guarantees the contractor’s performance of contractual obligations, subject to the bond wording.

A project may therefore require both:

• CAR insurance to protect the physical construction risk.
• A performance bond to secure contractual performance.

One cannot ordinarily replace the other.

Contractors All Risks Versus Erection All Risks

CAR insurance is generally intended for civil engineering and building works where materials such as concrete, stone, brick and timber form the main part of the project.

Erection All Risks insurance, or EAR, is normally used for the installation and erection of machinery, steel structures, industrial equipment and mechanical plants.

First Assurance describes EAR as covering the installation of machinery, plant and steel structures, including physical damage and related third-party liabilities. Liberty explains that CAR is commonly associated with civil works, while EAR applies more directly to machinery and equipment assembled on site and may include testing risks.

Some complex projects may require both construction and erection sections.

Common CAR Insurance Exclusions

Exclusions vary between insurers, but typical exclusions may include:

• War
• Terrorism unless specifically extended
• Political risks unless added
• Nuclear risks
• Consequential loss
• Project delay
• Contractual penalties
• Normal wear and tear
• Gradual deterioration
• Rust or corrosion
• Defective design
• Defective materials
• Defective workmanship
• Mechanical or electrical breakdown
• Inventory shortages
• Wilful acts
• Existing damage
• Employee injuries
• Motor vehicles requiring road insurance
• Loss discovered only during stocktaking
• Failure to maintain reasonable site security

Defective workmanship is particularly important.

A CAR policy may exclude the cost of correcting the defective item itself while still considering resulting damage to other insured property, depending on the clause used. The exact wording must be reviewed carefully.

Liberty’s published exclusions include war, terrorism, consequential loss, defective workmanship, wear and tear, employee liability and political risk.

When Should CAR Insurance Begin?

The cover should normally begin before:

• Construction materials arrive at the site
• Site preparation starts
• Excavation begins
• The contractor takes possession
• Temporary works are erected

The policy usually continues throughout the construction period and may extend into a maintenance or defects-liability period if this extension has been arranged.

Buying the policy after construction has begun may lead to underwriting restrictions, an inspection requirement or exclusion of existing damage.

What Is the Maintenance Period?

The maintenance period begins after the completed works are handed over.

During this period, the contractor may return to correct defects or complete outstanding obligations.

A CAR policy may be extended to cover specified physical damage occurring during maintenance activities or arising from causes that occurred during the insured construction period.

The scope may be limited to:

• Maintenance visits
• Damage caused while carrying out contractual maintenance
• Damage originating during the construction period

The maintenance extension should match the contract’s defects-liability period.

How Is the CAR Premium Calculated?

There is no single fixed premium for every construction project.

The insurer may consider:

• Total contract value
• Type of construction
• Project duration
• Site location
• Soil conditions
• Foundation design
• Height and number of floors
• Basement works
• Excavation depth
• Proximity to neighbouring buildings
• Flood exposure
• Fire exposure
• Construction methods
• Contractor experience
• Previous claims
• Third-party liability limit
• Plant and machinery value
• Maintenance period
• Security arrangements
• Required extensions

A simple single-storey residential project presents a different risk from a high-rise development, bridge, dam or road contract.

Documents Required for a CAR Quotation

Insurers may request:

• Completed proposal form
• Contract agreement
• Letter of award
• Bill of quantities
• Project drawings
• Project schedule
• Contract value
• Project description
• Site location
• Geotechnical report
• Contractor profile
• Previous project experience
• Construction method statement
• Details of subcontractors
• Plant and equipment schedule
• Third-party liability requirements
• Maintenance-period requirements
• Claims history
• Photographs of the site
• Project-financier requirements

Large or technically complex projects may require an insurer’s risk engineer to inspect the site before cover is confirmed.

Why the Correct Sum Insured Matters

The contract works should be insured for their full replacement value.

This may include:

• Contract price
• Materials supplied by the principal
• Labour
• Transport
• Customs duties
• Professional fees, where agreed
• Temporary works
• Construction materials
• Escalation allowance
• Debris-removal limit

Liberty’s proposal documentation requires declaration of the contract price, principal-supplied materials, plant and equipment, construction machinery and debris-removal amounts.

If the project is underinsured, the insurer may reduce the claim payment in proportion to the amount of underinsurance, subject to the policy terms.

What to Compare Between CAR Quotations

Two CAR insurance quotations should not be compared using premium alone.

Review:

The insured project value

Ensure every insurer has quoted using the same contract value.

The third-party liability limit

A low liability limit may be inadequate for projects located near occupied buildings, roads or public areas.

The policy excess

Confirm how much the contractor must pay following:

• Ordinary damage
• Theft
• Flood
• Earthquake
• Third-party property damage
• Collapse
• Defective-workmanship-related loss

Natural-perils cover

Check whether flood, storm, earthquake, landslide and subsidence are included and whether separate excesses apply.

Maintenance period

Confirm the duration and scope of maintenance cover.

Plant and equipment

Establish whether plant is included in the CAR policy or insured separately.

Existing and surrounding property

Renovation projects should include adequate protection for the existing building.

Debris removal

Check whether the limit would be sufficient after a major collapse or fire.

Exclusions and warranties

Read site-security, fire-safety, excavation, dewatering and storage warranties carefully.

Contractors All Risks Insurance Companies in Kenya

CAR insurance is available from several general insurers operating in Kenya.

Official product information currently confirms CAR or contractor-focused engineering protection from insurers including:

• Pioneer Assurance through Mjengo Care
• Pacis Insurance
• First Assurance
• Liberty and Heritage Insurance
• Britam General Insurance

Pioneer’s Mjengo Care combines CAR with plant and equipment, performance bond, public liability and WIBA sections. Pacis, First Assurance, Liberty and Britam also publish CAR or engineering-insurance information describing contract works and third-party protection.

Other Kenyan insurers may also offer CAR insurance depending on current underwriting appetite. Availability from CIC, ICEA Lion, Old Mutual or another provider should be confirmed through a current written quotation rather than assumed from an older market list.

How to Make a Contractors All Risks Claim

When insured damage or a third-party incident occurs:

1. Protect people from immediate danger.
2. Notify emergency services where necessary.
3. Take reasonable steps to prevent further damage.
4. Notify the insurer or intermediary immediately.
5. Photograph the scene and damaged property.
6. Preserve damaged materials for inspection.
7. Report theft, injury or serious accidents to the police where required.
8. Do not admit liability to a third party.
9. Do not begin permanent repairs without insurer approval, except emergency measures.
10. Submit the claim form and requested documents.
11. Allow the insurer’s loss adjuster or engineer to inspect the site.
12. Keep invoices, contracts, delivery records and repair quotations.

The insurer may request:

• Claim form
• Incident report
• Police abstract
• Project contract
• Bill of quantities
• Photographs
• Repair estimates
• Material invoices
• Site records
• Witness statements
• Third-party correspondence
• Engineers’ reports

How Imana Helps Contractors Compare CAR Insurance

Imana Insurance Agency Kenya Ltd helps contractors, developers and project owners compare Contractors All Risks quotations from suitable insurance companies.

The comparison may examine:

• Premium
• Contract-works limit
• Third-party liability limit
• Plant and machinery cover
• Excesses
• Natural-perils protection
• Debris-removal limit
• Maintenance period
• Existing-property cover
• Surrounding-property cover
• Cross liability
• Policy warranties
• Insurer engineering requirements
• Claims procedures

Imana can also assist clients in arranging related construction covers, including:

• WIBA
• Employers’ Liability
• Group Personal Accident
• Contractors’ Plant and Machinery
• Erection All Risks
• Professional Indemnity
• Public Liability
• Performance Bonds
• Advance-Payment Bonds
• Marine Cargo
• Goods in Transit
• Motor and Fleet Insurance

Contractors All Risks Insurance in Westlands, Nairobi and Across Kenya

Imana Insurance Agency Kenya Ltd serves contractors, developers, property owners, consultants and businesses from:

4th Floor, Krishna Centre
Woodvale Grove, Westlands
Nairobi, Kenya

The agency assists clients undertaking projects in Nairobi and throughout Kenya.

Project documents can be submitted electronically for quotation review, allowing contractors in different counties to compare available terms without making repeated office visits.

Request a Contractors All Risks Insurance Quote

Do not wait for construction to begin before arranging insurance.

CAR insurance should be considered during contract preparation so that the insured values, liability limits, project period and maintenance requirements match the actual construction agreement.

Website: www.imana.co.ke
Corporate insurance: https://imana.co.ke/insurance/corporate-insurance
Call or WhatsApp: +254 796 209 402

Build with ambition—but insure the risk beneath every foundation, scaffold and contract.

Frequently Asked Questions

What does Contractors All Risks insurance cover?

It normally covers unforeseen physical loss or damage to contract works, materials and specified construction property, together with certain third-party liabilities.

Is CAR insurance compulsory in Kenya?

It may be required by the project contract, employer, financier or tender conditions. Employee protection through WIBA is a separate statutory consideration.

Who should arrange the policy?

The principal, main contractor or another project stakeholder may arrange it. The policy can be structured to protect the interests of several parties.

Does CAR insurance cover subcontractors?

Subcontractors may be included as insured parties, subject to the policy schedule and contract arrangements.

Does CAR cover employees?

Not ordinarily. Employee injuries should be addressed through WIBA and other suitable employee-protection policies.

Does CAR cover construction equipment?

Some policies include specified plant and machinery. High-value mobile equipment may require separate Contractors’ Plant and Machinery insurance.

Does CAR cover defective workmanship?

The cost of correcting defective workmanship is commonly excluded. Resulting damage may be treated differently depending on the policy clause.

Does CAR cover delays?

Standard CAR insurance does not normally cover contractual penalties, poor performance or ordinary project delays.

What is the difference between CAR and EAR?

CAR is mainly intended for building and civil engineering works. EAR focuses on the erection and installation of machinery, plant and steel structures.

When should the policy start?

It should begin before materials arrive or construction activities commence at the site.

Can Imana compare quotations from different insurers?

Yes. Subject to insurer appetite and project details, Imana can help contractors compare suitable CAR insurance options.

Cover, premiums, extensions, limits, excesses and claims remain subject to the selected insurer’s underwriting requirements, project information, policy schedule and full policy wording.