Is Contractor All Risk Insurance the Same as Professional Indemnity?
Contractor All Risk and Professional Indemnity insurance aren’t the same — and confusing them could leave your business exposed. Here’s what each one covers and why you may need both.
The Short Answer: No, They’re Not the Same
Contractor All Risk insurance and Professional Indemnity insurance serve very different purposes.
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Contractor All Risk (CAR) protects the physical work being carried out — like damage to the site, materials, and tools.
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Professional Indemnity (PI) covers design advice, plans, and specifications — basically anything you recommend or create professionally.
If you carry out both physical work and give advice or designs, you may need both types of cover.
What Is Contractor All Risk Insurance?
Covers: Physical Work and Materials
Contractor All Risk insurance is designed for building contractors, developers, and subcontractors who carry out physical work on site. It protects the actual build and materials used.
Typical Cover Includes:
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Damage to the project during construction (e.g. fire, flood, storm, vandalism)
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Theft or loss of materials and tools
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Hired-in plant and equipment
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Temporary works like scaffolding or site huts
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Works in progress that need to be redone
Example: You’re halfway through a house extension and a fire damages part of the structure — CAR insurance pays to redo the damaged work.
Think of it as site-based cover for what you’re physically building.
What Is Professional Indemnity Insurance?
Covers: Advice, Design, and Specifications
Professional Indemnity insurance protects you if a client claims that your advice, design, or planning has caused them financial loss — even if the work was carried out by someone else.
Typical Cover Includes:
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Design errors or omissions
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Incorrect specifications or measurements
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Advice that results in a costly problem
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Contractual disputes over professional services
Example: You provide layout advice for steel supports, but a miscalculation leads to structural issues. The client sues for the cost of redesign and repairs — PI insurance can cover that.
It’s less about tools and more about what’s on the drawing board.
| Cover Type | Contractor All Risk | Professional Indemnity |
|---|---|---|
| Covers | Damage to physical works, tools, and plant | Claims arising from design, advice, or specifications |
| When It Applies | During construction or on-site work | Often months or years after the work is completed |
| Who Needs It | Builders, contractors, subcontractors | Anyone offering design or advice — contractors, engineers, architects |
| Common Risks | Fire, theft, flood, accidental damage | Negligence, measurement errors, faulty designs |
| Legal Requirement? | Not by law, but often contractually required | Not by law, but often required for professional contracts or tenders |
Do I Need Both as a Contractor?
If you only carry out physical work, Contractor All Risk cover may be enough. But if you advise, design, draw plans, or specify materials, then Professional Indemnity insurance is strongly recommended — and often required under contracts.
You may need both if:
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You’re a design & build contractor
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You offer layout or structural suggestions
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You specify materials or construction methods
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You submit plans, drawings, or calculations
At ABA Insurance, we often bundle both CAR and PI insurance into a single tailored package for contractors.
Are Either of These Policies Legally Required?
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CAR Insurance: Not required by law, but often by the client, principal contractor, or JCT contract.
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PI Insurance: Not required by law, but often mandatory for public sector, commercial tenders, and professional memberships (like RIBA, CIOB, etc.)
Why It Matters to Get the Right Cover
Failing to hold the correct insurance can be expensive — both financially and reputationally. If you’re relying on CAR insurance to cover a design mistake, you could be left completely exposed.
Likewise, if you only have PI and your materials are stolen or your work is damaged mid-project, you’ll be out of pocket without CAR cover.
The two types of cover complement each other — they don’t replace one another.
Get Expert Advice with ABA Insurance
At ABA Insurance, we help tradespeople, building contractors, and design & build specialists across the UK get the right mix of cover.
Tailored packages for both CAR and PI
Flexible monthly payments
Same-day documents available
Advisors who understand your trade
Need a quote or want to review your current policy?
Call us on 01474 833 322 or get a fast online quote at: www.abainsurance.co.uk/trades-insurance-quote/
