Contractors All Risk Insurance in the UAE: A Guide
What CAR covers, what construction contracts ask for, who arranges it, and what insurers need to quote.
✓ Since 1995 · ✓ Central Bank of the UAE Reg. No. 081 · ✓ Compared across leading UAE insurers
A construction project can be damaged long before it's handed over: by fire, storm, flood, theft or an accident on site. Contractors All Risk (CAR) insurance covers the works while they're being built, along with liability to other people. This guide explains what it covers, what contracts usually require, and what insurers need to quote. It's written by Al Berwaz Insurance Brokers, licensed by the Central Bank of the UAE (Registration No. 081).
What CAR insurance covers
| Section | What it covers |
|---|---|
| Material damage | Physical loss or damage to the permanent and temporary works and materials on site, from any cause not specifically excluded |
| Third-party liability | Injury to people and damage to property outside the works, such as neighboring buildings or passers-by, caused by the project |
| Common extensions | Debris removal, professional fees for reinstatement, the maintenance period, and plant and equipment if added |
Is CAR insurance required in the UAE?
There's no general law that makes it compulsory, but most construction contracts do. The FIDIC Conditions of Contract for Construction (Second Edition, 2017), the standard form behind many UAE projects, require the contractor to insure the works in the joint names of the contractor and the employer from the commencement date until the taking-over certificate is issued.
The same clause requires joint-names insurance for death or injury to any person and damage to property other than the works, until the performance certificate is issued, plus insurance for the contractor's own employees. Banks financing a project usually want to see the CAR policy before releasing funds.
Who arranges the policy?
It depends on the contract. Under FIDIC-style contracts, the main contractor usually arranges it. Some project owners prefer to arrange it themselves so one policy covers every contractor on site. Either way, the policy should name the owner, the main contractor and subcontractors as insured parties, so a claim isn't held up by arguments over who caused the damage.
How long the cover lasts
- Construction period: from the start of work until handover.
- Maintenance period: usually the defects liability period after handover, often 12 months, covering damage caused while fixing defects or arising from work done before handover.
- Extensions: if the project runs late, extend the policy before it expires to avoid a gap.
CAR, EAR and plant cover: what's the difference?
| Cover | Used for |
|---|---|
| Contractors All Risk (CAR) | Civil works such as buildings, roads and infrastructure |
| Erection All Risk (EAR) | Installing and testing machinery, plant and equipment. Mixed projects can use a combined policy |
| Contractors' Plant and Machinery | Your own cranes, excavators, generators and other equipment, usually on a separate annual policy |
| Delay in Start-Up (DSU) | The owner's lost revenue or extra financing costs if insured damage delays completion. Not included in standard CAR |
How premiums are calculated
Insurers look at:
- the contract value and the project duration
- the type of project and construction methods (for example, deep excavation or work near water costs more)
- the location and exposure to flood or storm
- the contractor's experience and claims history
- the deductible and the third-party liability limit you choose
- the length of the maintenance period
What to prepare for a quote
- Contract details: the contract value, start date, duration and maintenance period.
- Project description: what's being built, where, and the main construction methods.
- Contract insurance clause: so the cover matches what the contract requires.
- Parties: the owner, main contractor and key subcontractors to be named.
- Claims history: any project claims in the last three years.
Why use a broker?
An insurer can only offer its own wording. A broker compares insurers, checks the cover against your contract's insurance clause so you don't breach it, and helps with extensions and claims during the project. Broker commission is built into the insurer's premium, so using a broker doesn't add to your cost.
Got questions? We've got answers
Quick answers to other questions contractors and project owners ask us about CAR insurance.
Ask Us a QuestionDo subcontractors need their own CAR policy?
Usually not for the works themselves. A project CAR policy is normally arranged in joint names and can include subcontractors as insured parties. Subcontractors still need their own cover for their staff and their own equipment.
What happens if the project runs past the policy end date?
The policy has to be extended before it expires, usually for an additional premium. If it lapses, the works are uninsured until cover is restored, which can breach the contract.
Does CAR cover poor workmanship or design faults?
Not the faulty work itself. Standard policies exclude the cost of putting right defective design, materials or workmanship, though some wordings cover damage it causes to other parts of the works. Check the defects exclusion before you buy.
Do we need a new policy for every project?
Not always. Contractors running several projects a year can often use an annual policy that automatically covers projects up to an agreed contract value, instead of buying a single-project policy each time.
✓ Serving Abu Dhabi businesses since 1995
✓ Licensed by the Central Bank of the UAE (Reg. No. 081)
✓ Contractors All Risk and project insurance compared across leading UAE insurers
Sources:FIDIC: Clauses 17 to 19, Risk, Liability, Indemnity and Insurance · FIDIC Conditions of Contract for Construction, Second Edition 2017, Clause 19. Checked October 2026.
This guide is general information, not legal advice. Contract requirements vary, so check your own contract. Cover is subject to the policy terms, conditions and exclusions of the issuing insurer.