Construction rarely stays within the fence: dust, noise, vibration, a crane swinging over the neighbour's plot, traffic next to the pavement. When the loss goes outward – hitting the neighbour's building, a passer-by, or a utility line – CAR's Section II, the liability section, steps in. This article shows what that section is for, and where its limits lie.
- The liability section covers property damage and bodily injury caused to third parties.
- Classic cases: a cracked neighbouring building, a falling object, a damaged utility line, an injured passer-by.
- It works with its own limit and deductible – independently of the property section.
- It doesn't replace the company's general/professional liability insurance.
Who is a "third party"?
Anyone who isn't one of the project's insured parties: the neighbour, the passer-by, the utility company, the shop next door. By default, a subcontractor included among the insured parties, or the principal, is not a third party – their loss is a matter for the property section or for internal accounting between the parties. If the policy carries a cross-liability clause, however, insured parties can also bring liability claims against one another – this needs to be requested and checked specifically at inception. That's why it matters to know exactly who's on the policy: the chain's cover. (The client's existing building is a separate case: that's what the existing property extension is for.)
The classic loss patterns
A cracked building next to foundation works, piling or demolition is the genre's signature case – here, a condition survey taken before work starts settles the disputes. Also common: an object falling from scaffolding or a crane; a cut cable or a drilled-through pipe (civil engineering and utilities article); bodily injury outside the fence. What they have in common is that the injured party is an outsider – and their claim is legal in nature: the insurer stands behind the insured up to the extent of the insured's liability to pay compensation.
Limits and deductibles
What matters when choosing the liability limit is the surroundings, not the size of the project: a small infill site in a city centre can cause more damage to neighbours than a large hall on an empty greenfield plot. Both combined (property + bodily injury) and per-occurrence limits are seen; the stakes are especially high for bodily injury. This is where quotes differ the most – which is why the comparison table treats it as a separate row.
What stays outside the section?
Two important groups. One is contractual disputes: a dispute with the client over accounts, quality or deadlines isn't a liability loss – that's the territory of legal-expenses cover. The other is the company's activity outside the project: CAR's liability section is tied to the insured project, while standalone liability insurance accompanies the whole company – the relationship between the two is set out in the key article.
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