Anatomy of a construction insurance policy
Produced in partnership with Fisher Scoggins Waters LLP
Anatomy of a construction insurance policy

The following Construction guidance note Produced in partnership with Fisher Scoggins Waters LLP provides comprehensive and up to date legal information covering:

  • Anatomy of a construction insurance policy
  • All Risks—the Recital Clause
  • All Risks—the Operative Clause
  • All Risks—General Exclusions
  • All Risks—Period of Cover
  • All Risks—the Schedule
  • All Risks—the Definitions
  • Explanatory Notes
  • General Conditions
  • All Risks—Material Damage section
  • more

While there are a number of different types of insurance that will be in place on construction projects, for the purpose of this Practice Note we propose to deal with a typical ‘Contractor’s All Risks Policy’. This Practice Note will explain what a policy will look like, what clauses are commonly included and where to start when interpreting its provisions.

Construction Insurance Policy wording can differ quite considerably depending on the nature of the works being undertaken, the parties involved and their respective intentions, but a typical construction insurance policy will contain the following components:

  1. the Recital Clause

  2. the Operative Clause

  3. the Schedule

  4. a Definitions section

  5. a Liability section

  6. a Consequential Loss section

  7. General Exclusions and Exceptions

  8. General Conditions

The following is an analysis of the common sections and components found in a construction insurance policy:

All Risks—the Recital Clause

This clause identifies the parties to the contract. Prior to the Insurance Act 2015 (IA 2015) coming into force (from 12 August 2016), it was also common for this clause to declare that the insurance had been granted following a proposal being made to the company by the insured and that the accuracy of the information contained in the proposal is to be the basis of the contract. The essential feature of this clause was that it incorporated the information given