Does the cover of a CAR policy and a General Liability policy overlap?

  • To some extent there may appear to be an overlap between a Commercial General Liability (CGL) policy and a Contract Works or Contractor’s All Risks (CAR) policy in that both might cover damage to the principal’s property.
    • The CGL policy provides for damage to third party property. When the Insured is working at a client’s premises, that client would normally be a third party.
    • The CAR policy also provides cover for damage done during the construction process and that cover would typically extend to cover surrounding property (which could include that part of the client’s property which is not being worked on).
    • Both policies exclude damage, arising from the work, to the actual part being worked on.
  • Example: While painting the customer’s roof the Insured breaks the customer’s window.
    • Both the CAR and the CGL policy could cover the broken window.
    • Neither policy would cover the roof if the damage arose out of the work being done on it.
  • However, it should be remembered that a CAR policy is often project specific. If liability arises in terms of that project, it might be excluded by the CGL policy since the CAR policy would be the more specific insurance.
  • Where construction is done to an existing structure, the insurance is invariably arranged by the principal. Where it is a new project the insurance could be arranged by either the principal or the contractor.  Now if the liability cover is Principal Controlled Insurance (PCI) then there would obviously be no cover because that would be an own damage claim (i.e. the Principal’s own property was damaged by the contractor and the principal is not liable to a third party).
  • Although CAR policies vary greatly in terms of the cover they provide:
    • CAR would probably be the more suitable insurance to cover the construction project, but
    • CGL might offer wider cover for the Insured’s liability in general
General Liability