In Malaysia’s fast-paced construction and infrastructure development sector, managing risks is not just good practice—it’s essential.
From high-rise buildings to civil engineering works, every project carries exposure to unexpected events that could cause financial loss, legal issues, or project delays. That’s where Contractors All Risk Insurance Malaysia comes into play.
This guide will help you understand what contractors all risk insurance is, how it compares to comprehensive general liability insurance, and why it’s a critical tool for anyone involved in construction or project development in Malaysia.
What Is Contractors All Risk Insurance?
Contractors All Risk Insurance (CAR) is a type of insurance designed to provide comprehensive coverage for construction-related activities. It protects contractors, subcontractors, and project owners from loss or damage to construction works and third-party liabilities during the project period.
CAR insurance is typically required for:
- Building contractors
- Civil engineering contractors
- Infrastructure project owners
- Subcontractors
- Property developers
- Engineering and construction firms
Key Characteristics
- All-Risks Basis: Covers a wide range of unforeseen events unless specifically excluded.
- Project-Based: Coverage starts from the beginning of a project and continues until completion or handover.
- Customisable: Can be tailored to the project size, type, and duration.
What Does Contractors All Risk Insurance Cover?
CAR insurance generally consists of two main sections:
1. Material Damage (Section I)
Covers physical loss or damage to:
- Building works
- Machinery and equipment
- Temporary structures
- Construction materials
Examples of covered risks:
- Fire, lightning, explosions
- Theft or vandalism
- Natural disasters (storms, floods, landslides)
- Construction defects or collapse
- Damage during transit or on-site storage
2. Third-Party Liability (Section II)
Covers legal liability for:
- Bodily injury or death to third parties (e.g. passersby, nearby residents)
- Damage to surrounding property (e.g. neighbouring buildings)
This is particularly useful for high-traffic urban projects or developments located near existing infrastructure.
What Is Not Covered?
While CAR insurance is comprehensive, it doesn’t cover everything. Common exclusions include:
- War, terrorism, and civil commotion
- Normal wear and tear
- Faulty design or workmanship (unless endorsed)
- Consequential losses (e.g. project delays)
- Contractual penalties
- Vehicles licensed for road use (covered separately)
Always read the policy wording carefully and consult with your insurer to understand the exclusions or get endorsements for added coverage.
CAR Insurance vs. Comprehensive General Liability Insurance
A common question among contractors and developers is whether Contractors All Risk Insurance and Comprehensive General Liability (CGL) Insurance are the same. They are not—though both offer liability protection, they serve different purposes.
Feature | CAR Insurance | CGL Insurance |
Scope | Covers project-specific works and third-party risks | Covers general business operations |
Focus | Material damage to works + third-party claims | Only third-party bodily injury or property damage |
Project Basis | Yes (starts and ends with the project) | No (annual policy for business as a whole) |
Coverage for Own Works | Yes | No |
Target Audience | Contractors, developers, project owners | All business owners, including service-based businesses |
Conclusion: You may need both. CAR insurance protects your site and third parties during a project, while CGL insurance offers long-term protection for ongoing business operations.
Why Contractors in Malaysia Need CAR Insurance
1. Compliance with Contractual Requirements
Most public and private project owners require contractors to have CAR insurance as part of the contract terms. Failing to provide proof of insurance may result in disqualification or project termination.
2. Financial Protection
Construction mishaps can lead to losses worth hundreds of thousands of ringgit—or more. CAR insurance provides a financial safety net against accidents, natural disasters, and theft that would otherwise come out of your pocket.
3. Reputation and Trust
Insured contractors demonstrate professionalism, credibility, and readiness to take responsibility. This helps in gaining clients’ confidence and winning tenders, especially in large-scale projects.
4. Peace of Mind
Knowing you’re covered lets you and your team focus on completing the job without constantly worrying about “what if” scenarios.
How to Choose the Right Contractors All Risk Insurance Malaysia
Here are a few things to consider when selecting your CAR policy:
1. Scope of Coverage
Ensure both sections—Material Damage and Third-Party Liability—are included. You may also need add-ons like:
- Removal of debris
- Surrounding property damage
- Cross liability
- Temporary buildings and on-site storage
2. Sum Insured
Calculate the total contract value, including materials, labour, machinery, and plant. Don’t underinsured—it can lead to claim disputes or inadequate compensation.
3. Duration
Match the policy period with your project timeline. You can also include a maintenance period to cover post-completion defects.
4. Reputable Insurer
Choose a reliable Malaysian insurer with a proven track record in handling construction-related claims. Check customer service responsiveness and claim settlement experience.
5. Price vs. Value
The cheapest policy is not always the best. Look for a balance between affordability and adequate protection.
Is It Worth It?
Absolutely. In an industry filled with risk, Contractors All Risk Insurance is not just a safeguard—it’s an investment in your business continuity, legal compliance, and long-term growth.
Whether you’re building high-rises in Kuala Lumpur or managing infrastructure works across Malaysia, CAR insurance helps keep your project on track—even when the unexpected happens.
Explore Insurance Solutions with Minaris
At Minaris, we understand that every construction project is different. That’s why we help contractors and project developers across Malaysia find the right insurance solutions—from contractors all risk insurance to comprehensive general liability insurance.
We work with trusted insurers to ensure you get the protection you need—without the hassle.
Get in touch with us today to learn more or request a quote tailored to your next project.
Final Thoughts
In Malaysia’s competitive construction environment, mitigating risk is not optional—it’s part of doing business responsibly. Contractors All Risk Insurance Malaysia offers the coverage you need to protect your work, your team, and your reputation.
Pair it with comprehensive general liability insurance for all-around protection, and you’ll be equipped to face any challenge the construction site throws at you.
Let insurance work for you, so you can focus on building with confidence.
KH Chew is the Founder and Risk Advisor of Minaris, with over 30 years of experience in the insurance industry. He holds a Diploma in Insurance from the Malaysian Insurance Institute (MII), which laid the foundation for his in-depth expertise in property, financial lines, and other general insurance products. He is widely recognized for developing tailored insurance schemes for professionals and businesses across Malaysia. KH is also a passionate advocate for risk management and regularly advises clients and trade associations on comprehensive coverage strategies.