What Is the Contractors All Risk Insurance Requirement JKR Sets for Tenders?
If you've submitted a tender for a JKR or CIDB-related project, you've almost certainly seen an insurance clause buried in the contract conditions. It usually isn't written in plain language — it references a sum insured percentage, names co-insureds, and specifies an insurance period tied to the construction programme. That clause is the contractors all risk insurance requirement JKR imposes as a standard condition of contract, and it exists in some form across nearly every government-linked construction tender in Malaysia.
While the exact wording varies from project to project — and you should always follow the specific clause in your own contract document over any general guide — the underlying structure repeats consistently: a Contractors' All Risks (CAR) policy, sized to the full contract value, held for the duration of construction plus a defects liability period, with the employer (JKR, the developer, or the appointed authority) named as a joint insured or interested party.
Why JKR and CIDB Require CAR Insurance for Construction Contracts
The logic is straightforward. A construction site carries constant exposure to fire, flood, structural collapse, theft of materials, and machinery breakdown — any of which can wipe out months of progress overnight. On a privately funded project, that risk sits with the developer and contractor. On a government-funded project, an uninsured loss ultimately becomes a public liability, which is why CIDB registration and JKR tender eligibility are increasingly tied to demonstrable insurance compliance, not just technical and financial capability.
In practice, this means your CAR policy isn't just a formality to satisfy at award — it's checked at tender submission, verified before site possession, and can be audited during the contract period if a claim or dispute arises.
Minimum Sum Insured: How Much CAR Cover Do You Need?
Most JKR and CIDB-linked contracts set the minimum sum insured at 100% of the contract value, covering the permanent works, temporary works, and materials on site. Some tenders go further and require an additional buffer — commonly 10% to 15% above contract value — to account for cost escalation, debris removal, or professional fees in the event of a total loss. Contractor's plant and machinery (cranes, excavators, site equipment) is usually insured separately under a Contractor's Plant & Equipment extension or a standalone policy, not folded into the CAR sum insured.
Common mistakes contractors make with sum insured:
- Under-declaring the sum insured to reduce premium — most CAR policies carry an average (co-insurance) clause, which proportionately reduces any claim payout if you're found to be under-insured at the time of loss.
- Treating plant and machinery as automatically covered under CAR, when it usually needs its own extension or policy.
- Letting cover lapse or fall out of date after an Extension of Time (EOT) is granted, without notifying the insurer to extend the policy period accordingly.
CAR vs EAR Insurance: What's the Difference?
Contractors' All Risks (CAR) and Erection All Risks (EAR) are close relatives, but they cover different phases of work. CAR is built for civil and building construction — new builds, infrastructure, renovation, and general construction works. EAR is built for the erection, installation, or commissioning of plant and machinery — think power stations, industrial equipment installation, or M&E-heavy projects.
Many infrastructure and industrial projects involve both civil works and mechanical installation, in which case a combined CAR/EAR policy — or two policies running concurrently — is the more accurate structure. Getting this wrong (buying CAR alone for a project with significant M&E scope, for example) is one of the more common gaps that surfaces at claim time, when it turns out the loss falls squarely in the part of the project the policy didn't cover.
What CAR Insurance Typically Covers (and Excludes)
A standard CAR policy responds to physical loss or damage to the works, materials, and temporary structures on site during the construction period, arising from causes like fire, flood, storm, theft, and accidental damage. Most policies can be extended to include third-party liability arising from the works, professional fees following a loss, and debris removal costs.
What it generally won't cover, unless specifically extended: design defects, normal wear and tear, consequential loss from delay (that's a separate product — Delay in Start-Up or Advance Loss of Profits insurance), and war or terrorism unless purchased as an add-on. Reading the exclusions list before tender submission — not after a loss — is the difference between a policy that protects you and one that just satisfies a checkbox.
How to Get CAR Insurance for a JKR/CIDB Tender
- Confirm your contract value and construction period before requesting a quote — insurers price CAR based on both.
- Establish whether the project scope needs standalone CAR, standalone EAR, or a combined CAR/EAR policy.
- Check the tender document for exactly who must be named as joint insured or interested party (JKR, the developer, consultants, and sometimes financiers).
- Request your quote early — underwriting a CAR policy for a sizeable government project isn't instant, and leaving it to the week before site possession puts your tender timeline at risk.
- Keep the insurer informed of any Extension of Time or scope variation, so the policy period and sum insured stay aligned with the actual contract.