"Why would I need CAR if I already have liability insurance?" – and the reverse: "why do I need separate liability insurance if the CAR has a liability section?" The two questions are two sides of the same coin, and both are fair. The answer lies in the different nature of the two genres: one follows the project, the other follows the company.
- The CAR's liability section is tied to the project: it lives on that site, for that period.
- The contractor's (business and professional) liability insurance follows the whole company, on every job it does.
- Liability insurance doesn't replace the CAR's property section: it doesn't cover damage to the works themselves.
- The two aren't alternatives – they're complementary layers.
What can the CAR's liability section do?
It covers damage caused to third parties on the insured project, during the period of cover – details here. Its strength is that it applies to the project's whole insured circle (including subcontractors brought in), and can be sized to the project's risks. Its limitation is its scope: as soon as the project closes – or the loss happens on a different site – this section doesn't apply.
What can standalone liability insurance do?
It's tied to the company's operations: it lives on continuously, on every job – small repairs, maintenance, callbacks during the maintenance period, jobs for which a separate CAR would never be taken out. Its professional-indemnity module covers the financial consequences of defective work, which is a frequent source of dispute for construction firms. The details of this genre live on the sister site felelosseg.biz – on epites.biz, this is boundary territory.
Where's the overlap – and where's the gap?
Where there's overlap, it's worth notifying both insurers of the loss: under the rule on multiple insurance, the insured can turn to either one, and the insurers then settle between themselves – the final split is worked out under the policy wordings and the law. A gap opens, though, where only one layer applies: on a small job with no CAR, damage to the works themselves is uncovered (liability insurance doesn't cover that!), while at a company with no liability insurance, once the project CAR expires, the risk of a maintenance-period callback is left hanging. This is exactly the source of a common myth: the myths article.
The sensible structure
For a construction firm, the two together give the full picture: standing business and professional liability insurance for the company's operations, plus CAR/EAR for the projects (individually or under an annual open cover). The sizing depends on the company's profile – a natural topic for the portfolio conversation: the portfolio article, or for a consultation: booking.
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