Does a CAR policy cover subcontractors' mistakes?

A CAR policy can cover damage caused by subcontractors' work, but only if the subcontractors are included among the insured parties and the policy contains a cross liability clause. CAR normally does not cover redoing the defective work itself – it covers only the resulting damage to other parts of the works.

When this answer applies to your situation

• The main contractor buys a CAR policy for the whole site, and the work is carried out by several subcontractors.
• A subcontractor's mistake (for example, an incorrectly built joint) damages work already completed or other parts of the works.
• The client or the subcontractor wants to understand whether they need their own policy.

What can change the answer

• Whether the subcontractors are named as insured parties in the policy.
• Whether there is a cross liability clause – without it, claims between the insured parties can be left without cover.
• The size of the deductible: if it is large, a smaller loss caused by a subcontractor is in practice left uncovered.
• The type of defect: redoing the defective element itself is normally an exclusion.

What to check in the policy or quote

• The list of insured parties in the policy
• The cross liability clause
• The deductible and how it is applied to subcontractors' work
• The wording of the defective work exclusion (LEG/DE type clauses, if used)
• The clause on subrogation rights against subcontractors

The typical mistake

Assuming that "the site has a CAR policy, so everyone is safe". If a subcontractor is not among the insured parties, the insurer can pursue them by way of subrogation after paying the claim – and for the subcontractor that can mean bearing the whole loss themselves.

Example

A situation typical in practice (generalised example, not a specific client)

A typical situation: a subcontractor's plumbing failure floods two floors that have already been fitted out. If the policy has cross liability and the subcontractor is an insured party, the damage to other parts of the works can be covered by the policy; redoing the joint itself remains the contractor's cost.

Related content

• CAR/EAR insurance

This is not individual insurance advice; actual cover always depends on the chosen insurer's wording and the special conditions of the policy.