“All-risks construction” insurance: who is it for, when does it apply, and what are the typical exclusions?

Introduction

For SMEs active in construction or renovation projects in French-speaking Switzerland, all-risks construction insurance is a key risk management tool. Whether you are the project owner, contractor, or involved as a subcontractor, all-risks construction insurance covers material damage that can jeopardize the continuity of a project and significantly impact your costs and commitments. This guide will explain who needs to take out this insurance , when, and what typical exclusions to anticipate , enabling you to structure your decisions and meticulously document your insurance contracts.

1. What is “All Risks Construction” (ARC) insurance?

All-risks construction insurance (ARC) is a type of property damage insurance specific to the construction phase , covering material damage occurring during the construction process, regardless of third-party liability. Its principle is that of "everything except" : everything is insured except what is explicitly excluded in the contract. This approach guarantees broad coverage against unforeseen risks that may affect the structure and materials being built.

1.1 Main Cover

During the duration of the works – from the start of construction to the final acceptance of the works – the TRC typically covers:

• Accidental damage to the structure under construction (partial collapse, fire, water damage, etc.).

• Damage to materials and equipment present on the construction site.

• The costs associated with clearing, demolition and reconstruction after a disaster.

This type of coverage prevents the company or project owner from having to finance these costs from their own funds when an accident occurs.

1.2 Scope and period of validity

The All Risks Construction (ARC) policy applies specifically to work on a given site and for a defined period (usually from the start of work to final handover). This period must be clearly documented in the contract, as post-acceptance damage is generally not covered unless contractually extended.

2. Who should subscribe and when: responsibilities and roles

Understanding who should take out insurance and when is an essential step in managing the risks of a construction project.

2.1 The project owner

The project owner (owner or developer) is generally the one who takes out the construction all-risks insurance policy. This position allows them to guarantee consistent coverage for all risks related to the construction site.

Why subscribe in advance?

Before construction begins, analyzing the plans, budget, and schedule allows for the proper sizing of insurance coverage. Early enrollment protects against claims arising as soon as the first elements are installed on site.

2.2 The stakeholders (contractor, subcontractors)

Although construction all-risks insurance (CAR) is often purchased by the project owner, contractors and subcontractors may be included or require specific coverage depending on their contractual obligations. It is essential to document roles and responsibilities to determine if additional coverage is necessary.

3. Detailed coverage and typical exclusions

A TRC cover is not a universal protection: it includes explicit exclusions that must be controlled in your trade-offs.

3.1 Common Exclusions

TRC warranties do not usually cover:

• Intentionally caused damage .

• Normal wear and tear or pre-existing defects.

• Accidents related to non-compliance with safety standards .

• Some intangible damages or pure financial losses.

These exclusions must be carefully identified and documented to avoid surprises in the event of a claim.

3.2 Exclusions by nature of risk

Some policies specifically exclude:

• Losses related to prolonged work stoppages without visible damage.

• Damage caused by acts of war, terrorism or radioactivity (according to the contract).

• Damage resulting from prolonged abandonment of the construction site .

Documenting these exclusions helps to assess whether warranty extensions or additional insurance are necessary.

4. Practical scenarios for SMEs: decision analysis

4.1 Case A: Renovation of a condominium building

Context : an SME is coordinating a renovation of a condominium building with multiple stakeholders.

Recommended action : Take out a comprehensive construction insurance policy tailored to the value of the work and the operational risks (e.g., interior work, structural disturbances). Document exclusions related to theft and vandalism to assess whether additional coverage is needed.

4.2 Case B: Adding a story to a villa with a swimming pool

Context : complex construction site with earthworks, waterproofing and roadworks.

Recommended action : Size the structural damage insurance (TRC) according to sensitive structural elements (framework, waterproofing). Verify its integration with the owner's liability insurance to cover damage caused to third parties (e.g., neighbors). Document the site safety plan to minimize exclusions related to non-compliance with standards.

Guidelines and checklist

What needs to be documented:

• Full description of the construction site (plans, quotes).

• Tentative work schedule.

• List of stakeholders and subcontractors.

• Risks identified by workstation.

• Contractual exclusions and possible extensions.

• Amounts insured and deductibles.

Common mistakes and how to avoid them

Error: underestimating TRC exclusions. Solution: detailed analysis of clauses and documentation of requirements.

Error: confusing TRC and RC project owner. Solution: map the site risks and those responsible.

Error: subscribing too late. Solution: activate the coverage before work begins.

Questions to ask your insurer/broker

1. What are the specific exclusions of the TRC?

2. Does the police cover the costs of clearing and demolition ?

3. What natural events are included/excluded?

4. What extensions are available (theft, vandalism, business interruption)?

5. How are franchises managed?

6. Does the coverage extend after the work is completed ?

7. How to coordinate with the project owner's liability insurance ?

8. What is the method for valuing materials and work ?

9. What site documents should be kept for quick handling?

10. Are there any prerequisites for validating the coverage?

Conclusion

To manage the risks associated with a construction site, all-risks construction insurance is a strategic pillar. By covering material damage during the construction phase, it reduces the financial exposure of SMEs and ensures project continuity. Precise documentation of exclusions, coverage periods, and contractual liabilities is essential for effectively selecting your coverage. The next step is to integrate these benchmarks into your audit of

portfolio and adjust your insurance policies with your broker.