What Is Contractor’s All Risk Insurance in Nigeria?

Construction sites present risks that do not exist once a building is completed.

Materials are exposed, structural elements may be incomplete, and heavy equipment is operating continuously. These conditions create a higher probability of accidental damage.

For this reason, construction projects typically carry Contractor’s All Risk (CAR) insurance.

What CAR Insurance Covers

CAR insurance protects both the project and surrounding third parties during construction.

Coverage generally includes:

Damage to the building under construction
For example, structural collapse during construction or fire on the building site.

Accidental construction damage
Mistakes by workers that damage parts of the project.

Theft of construction materials
Loss of building materials stored on site.

Storm damage
Heavy rain or wind damaging unfinished structures.

Third-Party Liability

CAR insurance also covers damage caused to nearby people or property.

For example:

If scaffolding collapses and damages a neighbouring building, CAR insurance may compensate the affected property owner.

Legal Requirement in Nigeria

Nigerian law requires Contractor’s All Risk insurance for buildings under construction that are two floors or higher.

Once a building is completed and opened to the public, a different type of insurance requirement applies.