The core difference
The easiest way to separate the two is to ask whose loss it is. If the loss is damage to the works you are building, or to materials on site, it is a first-party loss and the question is about Contractors All Risk insurance. If someone else is injured or their property is damaged and they say you are responsible, it is a third-party claim and the question is about public liability insurance.
| Point | Contractors All Risk | Public liability |
|---|---|---|
| Whose loss | Yours, or the insured parties’, to the works | A third party’s, for which you may be legally liable |
| What is addressed | Accidental physical loss or damage to the works and materials | Injury and property damage to third parties arising from your activities |
| Does it require fault? | Generally responds to accidental loss, subject to terms | Generally depends on legal liability being established |
| Typical duration | The project, or a year for annual arrangements | Usually a year, renewed |
| Contract requirement | Specified in the contract, often with the sum insured and period | Specified in the contract, usually as a minimum limit of indemnity |
| Typical limit basis | Contract value | A limit of indemnity per event or in total |
How the two interact
Some Contractors All Risk policies include a third-party liability section that applies to the project. That can satisfy a contract’s liability requirement, but it may be limited to the project, may have a lower limit or may not extend to your wider operations. Many contractors therefore also hold a separate annual public liability policy.
- Overlap
- Where both a contract works liability section and a separate public liability policy apply, the policies may have provisions about which responds first. Ask the insurers how they treat that.
- Gaps
- A project-specific liability section does not usually cover liability from work away from the project. An annual liability policy may not extend to the specific risks of one contract.
- Named insureds
- The contract may require the employer or main contractor to be an insured under one or both. Check each policy’s wording.
Which policy would be considered
| Situation | Likely area to consider |
|---|---|
| A storm washes out a newly laid pipeline section | Contractors All Risk, subject to water and weather terms |
| A reversing tipper damages a neighbouring boundary wall | Public liability, and possibly fleet cover for the vehicle |
| Materials stolen from a fenced site store | Contractors All Risk, subject to security conditions |
| A pedestrian falls into an unmarked trench | Public liability |
| An excavator strikes an existing water main | Public liability, and the treatment of underground services |
| Your own excavator is damaged in the incident | Plant insurance, not contract works or public liability |
Illustrations only. Outcomes depend on the facts, the policy wording and the cause of loss.
Common misunderstandings
- “CAR covers anyone who is hurt.” It does not address third-party liability unless the policy has a liability section.
- “Public liability covers damage to my works.” It does not. That is a contract works question.
- “One policy is enough because the contract only mentions one.” Read all the insurance clauses, and the contract data, for each cover required.
- “My annual policy automatically covers this project.” Not necessarily. Check what the contract requires and what the policy’s territory, activities and limit say.
The wider picture
These two covers sit alongside others, including plant insurance, goods in transit and employers’ liability. The construction insurance checklist helps you work through all of them.
Common questions
Can one claim involve both covers?
Yes. An incident can damage the works and injure or damage a third party at the same time. The two covers may each be considered for their own part of the loss, depending on the wording.
Which cover does the contract usually ask for first?
Many contracts address contract works and liability together, but the order and the detail vary. Read your contract’s insurance clauses and contract data to see what applies.
Does public liability cover my subcontractors?
It may respond to your liability for their work, subject to its terms, but subcontractors normally need their own insurance as well. Check the policy and the subcontract.
Check your contract’s requirements
Send us the insurance clauses and we will help you see which covers the contract expects and how they fit together.
Send Your Contract RequirementsAn enquiry does not put cover in place. Cover is subject to underwriting and policy terms.
Related reading
- Contractors All RiskCover for the works under construction, such as roadworks, drainage, pipelines and structures, subject to policy terms.
- Public liabilityCover aimed at your legal liability to third parties for injury and property damage arising from your work.
- Annual vs project-specific contractors’ insuranceAnnual versus project-specific contractors’ insurance compared: how each is structured, when each may suit a South African contractor and what to check against the contract.
- Construction insurance checklist for contractorsA construction insurance checklist for a broker conversation: project details, contract requirements, covers, plant, subcontractors and comparing quotations.