Contractors' all-risks insurance for renovation and construction

A completed building is a known, stable risk that an ordinary property or fire policy can price with reasonable confidence. A building site, partway through renovation or construction, is not. Materials sit exposed before they are fixed in place, structural work is temporarily unstable, workers and subcontractors move through the site daily, and the value at risk changes week by week as the project progresses. Contractors' All Risks (CAR) insurance exists specifically for that in-between period.

What CAR insurance is built to do

CAR insurance covers physical loss or damage to the works under construction or renovation, and often the materials and plant brought on site to do the work, during the construction period itself — not before the project starts and typically not after practical completion, when ordinary property insurance takes over. Where a project involves installing machinery or equipment as part of the works, insurers commonly offer a related product, Erection All Risks, structured the same way but focused on the erection and testing phase of plant and machinery rather than a building.

Because it is written around a defined project and period rather than an ongoing property, a CAR policy is typically taken out for the duration of the contract works, and the sum insured is set against the contract value of the project — figures that are specific to each project and should come from your contractor's or insurer's quotation rather than a generic figure, since project scope, materials and duration vary too widely for a single benchmark to apply.

What sits alongside the core cover

A CAR policy for a renovation or construction project is rarely bought alone. It is commonly paired with, or sold alongside, related commercial covers that address risks the property section does not:

• Public liability, covering the contractor's legal liability for injury to third parties or damage to third-party property arising from the work — relevant on a renovation where, for example, debris or noise affects a neighbouring unit.
• Work injury compensation, covering an employer's statutory liability for injury to workers on site under the Work Injury Compensation Act framework, which is a separate obligation from the property risk CAR itself insures.
• Existing structure or surrounding property cover, sometimes added specifically for renovation work carried out inside or adjacent to an occupied building, where damage to the existing structure — not just the new works — is a realistic risk.

For a homeowner engaging a contractor for a major renovation, rather than a developer running a construction project, the practical question is usually not "do I buy CAR insurance," but "does my contractor carry it, and does it protect me." Many renovation contracts require the contractor to hold CAR and public liability cover as a condition of the job; check this is actually in force, and ask to see the certificate of insurance and its expiry date, rather than taking it on trust.

What CAR insurance typically does not cover

• Defects in workmanship purely as a design or quality issue, as distinct from physical loss or damage caused by an insured peril — CAR is a property damage policy, not a workmanship warranty.
• Consequential losses such as lost rental income or delay costs, unless specifically extended.
• Wear and tear, or losses arising from a failure to follow the design or specification, which most policies exclude as a matter of course.

Because exclusions and extensions vary meaningfully between insurers and between project types, the policy wording — not the marketing summary — is what determines whether a specific scenario on your project would actually be covered.

Questions to ask before a renovation or construction project starts

1. Who is required to hold the CAR policy — the homeowner, the main contractor, or both? This should be set out clearly in the renovation or construction contract, not assumed.
2. Does the sum insured reflect the full contract value, including materials on site? An underinsured policy can leave a significant shortfall if a loss occurs partway through the project.
3. Is the existing structure covered, if the work is inside or attached to an occupied building? This matters especially for renovations rather than ground-up construction.
4. What is the policy period, and does it cover any maintenance or defects liability period after practical completion? Standard CAR cover typically ends at completion; an extension may be needed.
5. Does the contractor also carry public liability and work injury compensation cover, separately confirmed? A CAR policy alone does not address these two distinct exposures.

Speak to a licensed broker or advisor about the specific scope of your project through our advisor directory, or compare commercial cover through compare/sg/commercial.

Talk to an advisor

Getting Contractors' All Risks cover right is less about finding the cheapest premium and more about matching the sum insured and the exclusions to your actual project. A licensed advisor can review your renovation or construction contract's insurance requirements before work starts. Find one through our advisor directory, or ask our assistant to explain a CAR quotation you have received.

Sources

• MSIG Singapore — Commercial Insurance
• MSIG Singapore — Why be an MSIG agent?
• Insurance — Wikipedia