There's little deliberate misunderstanding around construction insurance – but there's plenty of well-meaning misconception, passed down from crew to crew for generations. We've collected the five most stubborn ones, and set beside each what's true instead. Not to be clever, but so a claim doesn't catch you by surprise.
- Contractor's liability insurance does not protect the works under construction.
- All-risk doesn't mean "everything" – the exclusions list is part of the genre.
- The risk on a small job isn't always small.
- The principal's policy doesn't necessarily protect the contractor – and vice versa.
- Handover isn't the end of the risk, just a change of genre.
Misconception 1: "I have liability insurance, that covers everything"
Contractor's professional liability insurance is for loss caused to someone else. It doesn't cover storm damage to your own half-finished works, theft of materials built in, or collapse – that's the job of CAR's property section. The two genres together give the full picture: their relationship is unpacked here.
Misconception 2: "All-risk pays for everything"
All-risk means: whatever isn't excluded is typically covered. That's broader than a named-perils cover – but the exclusions (liquidated damages, wear and tear, redoing your own defective work) and the conditional elements (security, protective measures) are very much alive. The map: what's covered and what isn't.
Misconception 3: "No need for insurance on a small job"
The job can be small – the loss isn't necessarily. On a short roof repair, rain getting in through the opened-up covering can soak the entire floor below; on a small mechanical tie-in, water damage can hit a fully operating office. The question isn't the size of the job, but the scale of the possible loss – which is the honest subject of the small-project article.
Misconception 4: "The other party has already insured it, we don't need to"
That may well be true – but it needs to be known, not hoped for. The principal's policy doesn't necessarily extend to the contractor's plant and liability; the main contractor's policy doesn't automatically protect the bottom of the chain. The answer isn't double insurance, but a certified, precise division of roles: who should take it out? and the chain's cover.
Misconception 5: "After handover, there's nothing left to deal with"
With handover, CAR's base cover comes to an end – but the risk of maintenance-period call-backs and the operational risks of the finished building start right at that point. A clean close has two steps: a maintenance extension on the project side, and timely property insurance starting on the finished building – after handover. The ten-point, quick-list version lives on the knowledge hub's template shelf: the myth-busting collection.
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