Construction All Risks
Uploaded by
Azman YahayaConstruction All Risks
Uploaded by
Azman YahayaConstruction All Risks (CAR)
The premium for CAR insurance is calculated using the following formula:
Premium = [Sum Insured * Risk Factor * Loading] / 100
Sum Insured: The value of the assets that are being insured.
Risk Factor: The probability of a loss occurring. This is typically based on the
type of project and the location of the project.
Loading: An additional amount that is added to the premium to cover the insurer's
overhead costs and profit.
Risk Factors for CAR Insurance
The risk factor for CAR insurance is typically based on the following factors:
The type of project: The type of project, such as a commercial or residential
project, will affect the risk factor.
The location of the project: The location of the project, such as a city or rural
area, will affect the risk factor.
The construction methods: The construction methods that are being used, such
as traditional or prefabricated construction, will affect the risk factor.
The history of claims: The history of claims on the project will affect the risk
factor.
Loading Value for CAR Insurance
The loading value for CAR insurance is typically around 20%. This means that the
premium will be 20% higher than the sum insured.
Third Party Liability (TPL)
The premium for TPL insurance is calculated using the following formula:
Premium = [Number of Employees * Average Weekly Wage * Exposure Period *
Liability Limit] / 100
Number of Employees: The number of employees who are working on the
project.
Average Weekly Wage: The average weekly wage of the employees.
Exposure Period: The length of time that the project will be in operation.
Liability Limit: The maximum amount that the insurer will pay in the event of a
claim.
Risk Factors for TPL Insurance
The risk factor for TPL insurance is typically based on the following factors:
The type of project: The type of project, such as a commercial or residential
project, will affect the risk factor.
The location of the project: The location of the project, such as a city or rural
area, will affect the risk factor.
The construction methods: The construction methods that are being used, such
as traditional or prefabricated construction, will affect the risk factor.
The history of claims: The history of claims on the project will affect the risk
factor.
Loading Value for TPL Insurance
The loading value for TPL insurance is typically around 10%. This means that the
premium will be 10% higher than the sum insured.
Example
Let's say that you are a contractor and you are working on a commercial construction
project with a sum insured of \$10 million. The risk factor for the project is 1.2 and the
loading value is 20%. The premium for CAR insurance would be calculated as follows:
Premium = (10,000,000 * 1.2 * 0.2) / 100 = \\$240,000
The premium for TPL insurance would be calculated as follows:
Premium = (100 * 500 * 1 * 10,000,000) / 100 = \\$50 million
Conclusion
The premium for CAR and TPL insurance can vary depending on the specific project.
However, the formulas above can be used to get a general idea of the cost of
insurance. It is important to consult with an insurance broker to get an accurate quote
for your project.
Insurance rates are subject to change and are usually determined by insurance
companies based on their underwriting guidelines, market conditions, and historical
claims data.
However, I can provide some hypothetical examples to illustrate how the premium
calculations might work for CAR and TPL insurance:
Example 1: CAR Insurance Premium Calculation
Assume we have a construction project with the following details:
Project Value: $10,000,000
CAR Rate: 1.5% (as set by the insurer)
Additional Coverage Extensions Premium (CEP): $50,000
Deductible Percentage: 2% of Project Value
Risk Mitigation Discount: 10% of Base Premium
1. Calculate the Base Premium (BP): BP = Project Value × CAR Rate BP =
$10,000,000 × 0.015 BP = $150,000
2. Calculate the Deductible Impact: Deductible Impact = BP × (Deductible
Percentage / 100) Deductible Impact = $150,000 × (2 / 100) Deductible Impact =
$3,000
3. Calculate the Total CAR Premium: Total CAR Premium = BP + CEP - Deductible
Impact - Risk Mitigation Discount Total CAR Premium = $150,000 + $50,000 -
$3,000 - ($150,000 × 0.10) Total CAR Premium = $150,000 + $50,000 - $3,000 -
$15,000 Total CAR Premium = $182,000
Example 2: TPL Insurance Premium Calculation
Assume we have a construction project with the following details:
TPL Limit: $5,000,000
TPL Rate: 0.7% (as set by the insurer)
Deductible Percentage: 1% of TPL Limit
Risk Mitigation Discount: 5% of Base Premium
1. Calculate the Base Premium (BP): BP = TPL Limit × TPL Rate BP = $5,000,000 ×
0.007 BP = $35,000
2. Calculate the Deductible Impact: Deductible Impact = BP × (Deductible
Percentage / 100) Deductible Impact = $35,000 × (1 / 100) Deductible Impact =
$350
3. Calculate the Total TPL Premium: Total TPL Premium = BP - Deductible Impact -
Risk Mitigation Discount Total TPL Premium = $35,000 - $350 - ($35,000 × 0.05)
Total TPL Premium = $35,000 - $350 - $1,750 Total TPL Premium = $32,900
Please note that these are simplified examples and don't reflect actual market rates.
Real-world premium calculations involve more complex risk assessments and
considerations by insurance companies. If you need accurate premium quotes for a
specific infrastructure project, it's best to approach insurance providers and request
detailed quotations based on the project's unique characteristics and requirements.
Template: Construction All Risks and Third Party Liability Insurance Premiums
Calculation
Excel Sheet 1: Construction All Risks (CAR) Insurance
Project Name Start Date End Date Construction Value CAR Premium Rate CAR Premium
Project A 2023-08-01 2024-02-01 $1,000,000 0.25% [Formula]
Note: The CAR premium calculation will typically involve multiplying the construction
value by the premium rate, but you may have other factors that affect the premium
calculation.
Excel Sheet 2: Third Party Liability (TPL) Insurance
Project Name Start Date End Date Coverage Limit TPL Premium Rate TPL Premium
Project A 2023-08-01 2024-02-01 $2,000,000 0.15% [Formula]
Note: The TPL premium calculation will usually involve multiplying the coverage limit by
the premium rate.
You can add more rows in each sheet for multiple projects, and the respective premium
calculations will update automatically based on the formulas.
Formulas:
For CAR Premium Calculation (in cell E2): =C2 * D2 / 100
For TPL Premium Calculation (in cell E2): =C2 * D2 / 100
Instructions:
1. Enter the project details, including project name, start date, end date,
construction value, and premium rates in the appropriate cells.
2. The CAR Premium and TPL Premium will be calculated automatically based on
the formulas.
3. Adjust the formulas and columns as per your specific requirements.
Remember to double-check the formulas and data input to ensure accuracy in the
premium calculations. Additionally, please consult with insurance professionals or
experts in your region to verify that the premiums are accurately calculated based on
the specific insurance policies and regulations applicable to your situation.
