Is Contractors All Risk insurance compulsory in Singapore?

Contractors All Risk (CAR) is not compulsory under any single Singapore statute, but it is effectively mandatory by contract. The Building and Construction Authority (BCA), HDB, JTC, LTA and most main contractors require CAR cover as a condition of tender award. The required limits and the period of cover are set in the project conditions of contract — for example the PSSCOC (Public Sector Standard Conditions of Contract) and the SIA conditions of contract for private projects.

What does Contractors All Risk insurance cover?

A CAR policy combines two sections. Section 1 — Material Damage covers physical loss or damage to the contract works, materials, temporary works, plant and equipment on or adjacent to the site, from any cause not specifically excluded. Section 2 — Third Party Liability covers legal liability to third parties for bodily injury or property damage arising from the construction works. The cover runs from the start of works (or arrival of materials at site) through to the issue of the completion certificate, plus a maintenance period of usually 12 to 24 months for defect rectification.

Who arranges CAR — the main contractor or the employer?

The conditions of contract decide. Under PSSCOC the Contractor is responsible for taking out CAR in the joint names of the Employer, the Contractor and all sub-contractors. Under the SIA conditions a similar joint-names regime applies. Some bespoke contracts make the Employer responsible for arranging an owner-controlled project insurance programme (OCIP). Read the insurance clause — usually clause 17 or 18 in standard forms — and the contract data sheet to confirm who is responsible.

What is excluded from a Contractors All Risk policy?

Common CAR exclusions include defective design (covered separately by professional indemnity), defective workmanship and materials (only the consequential damage to other works is covered, not the cost of rectifying the defect itself), wear and tear, gradual deterioration, war and nuclear risks, cyber risks, and consequential financial loss with no physical damage. Tunnelling, piling beyond a stated depth, and works in or adjacent to water often require specific extensions and may attract higher deductibles.

How is the CAR sum insured set?

The Section 1 sum insured should equal the full contract sum plus the value of free-issue materials, plus any escalation provision and an allowance for removal of debris and consulting fees. Under-declaring the contract sum triggers average and scales claim payments down. The Section 2 third-party liability limit is set by the project insurance clause — Singapore main contracts typically require S$5m to S$10m of public liability for the project; major infrastructure may require S$25m or more.

Contractors All Risk Insurance Singapore

When CAR insurance is required

CAR is not compulsory under Singapore statute. It is, however, effectively mandatory by contract across the Singapore construction sector. CAR cover is required by:

BCA — building contractor and works-head licence applicants under the Builders Licensing Scheme must demonstrate adequate project insurance arrangements.
HDB and JTC — standard conditions of contract for HDB and JTC main contracts require joint-names CAR cover for the duration of the works.
LTA, PUB, NEA, NParks — statutory boards routinely require CAR as a tender prerequisite.
Private developers — SIA Articles & Conditions of Building Contract and bespoke conditions require CAR.
Main contractors — sub-contract conditions flow the CAR requirement down to sub-contractors.

The two sections of a CAR policy

A Singapore CAR policy is usually written in two sections:

Section 1 — Material Damage

Covers physical loss or damage to the contract works, materials on site, temporary works, plant, formwork and contractor's tools from any cause not specifically excluded. Pays the cost of repair or replacement up to the sum insured.

Section 2 — Third Party Liability

Covers legal liability to third parties (members of the public, neighbouring property owners, adjacent utilities) for bodily injury or property damage arising from the execution of the contract works. Sits over and around the public liability cover the main contractor carries at the corporate level.

Joint-names cover and the “insured”

Singapore CAR policies are typically written in joint names: the Employer (developer or owner), the Main Contractor, all sub-contractors of every tier, and the Architect / Engineer in their capacity as project supervisors. The effect is that no party can sue another insured party under the policy — the insurer indemnifies all insured parties for the same loss without subrogating against fellow insureds.

Read the insurance clause in your specific contract carefully. PSSCOC, SIA, FIDIC and bespoke contracts each have slightly different wording on who must be named, who bears the policy excess, and how recoveries from sub-contractors are handled.

Common exclusions

Defective design (covered by professional indemnity carried by the architect and engineer).
Defective workmanship and materials — only the consequential damage to other parts of the works is covered.
Wear, tear, gradual deterioration.
War, nuclear and cyber risks.
Penalties and liquidated damages.
Consequential loss with no physical damage.
Tunnelling, piling and works in water — usually need named extensions and higher excesses.
Existing structures around the works — need an “existing surrounding property” extension.

Sum insured and limits

Section 1 (Material Damage): set the sum insured to the full contract sum, plus free-issue materials, plus escalation, plus an allowance for removal of debris and professional fees. Under-declaration triggers average and scales claim payments.

Section 2 (Third Party Liability): set by the contract insurance clause. Typical Singapore main-contract limits:

Small projects (under S$5m contract sum) — often S$2m to S$5m limit.
Mid-size building works — S$5m to S$10m.
Infrastructure, MRT and large public-sector works — S$10m to S$25m or more.

Period of cover and maintenance period

CAR runs from the start of construction (or arrival of materials on site, whichever is earlier) through to the issue of the completion certificate. A maintenance period of typically 12 to 24 months is then added to cover defects rectification — loss or damage during defect-correction works, and damage discovered during the maintenance period that was caused during the construction period.

Contractors All Risk (CAR) Insurance