Introduction

IKHLAS CONTRACTORS' ALL RISKS (CAR) TAKAFUL may be concluded by
1. the principal,
2. the contractors engaged in a project, including all subcontractors.

In order to prevent overlaps or gaps in the cover provided, a CAR takaful should be concluded for all parties concerned.

What IKHLAS Contractors' All Risks Takaful cover?

IKHLAS CAR Takaful can be taken out for all building and civil engineering projects, such as
1. residential and office buildings, hospitals, schools, theatres,
2. factories, power plants,
3. road and railway facilities, airports,
4. bridges, dams, weirs, tunnels, water supply and drainage systems, canals, harbors.
Particular, the cover comprises the following:

Contract Works
This term implies all the operations to be carried out by a contractor and his subcontractors in compliance with the building contract, including preparatory work on the site, the execution of temporary structures, as well as the use of all the materials stored on the site which are to be incorporated in the structure.

Construction plant and equipment
This term implies workers’ accommodations, storage sheds, preparation and mixing plant, scaffolding, utilities.

Construction machinery
This term implies earthmoving equipment, cranes and the like, as well as site vehicles not licensed for use on public roads no matter whether such machinery is owned or hired by the contractor.

Costs for clearance of debris
This term implies the expenses incurred for the removal of debris from the site in the event of a loss indemnifiable under CAR takaful.

Third party liability
This term implies legal liability arising out of property damage or bodily injury suffered by third parties and occurring in connection with the contract works on or near the building site.

Surrounding property
This term implies property located on the site as well as property surrounding the site.

Scope of Cover
CAR takaful provides an ’all risks’ cover - every hazard is covered which is not specifically excluded. The most important causes of losses indemnifiable under CAR takaful are :
-fire, lightning, explosion, crashing aircraft, extinguishing water or other fire fighting measures,
-flood, inundation, rain, snow, avalanche, tsunami,
-windstorm of any kind,
-earthquake, subsidence, landslide, rockslide,
-theft, burglary,
-bad workmanship, lack of skill, negligence, malicious acts or human error.

Exclusions
The cover provided by CAR takaful is only subject to a few obvious exclusions which the international insurance market usually applies. These exclusions named in the certificate essentially comprise:

- loss or damage due to war or warlike operations, strike, riot, civil commotion, cessation of work, requisition by order of any public authority,
- loss or damage due to wilful act or wilful negligence of the Participant or of his representatives,
- loss or damage due to nuclear reaction, nuclear radiation or radioactive contamination,
- consequential loss of any kind of description whatsoever, such as claims from penalties, losses due to delay, loss of contract,
- loss or damage due to mechanical and/or electrical breakdown or derangement of construction machinery, plant and equipment,
- loss or damage due to faulty design,
- the cost of replacement, repair or rectification of any deficiencies in the contract works. However, loss of or damage to correctly executed items resulting from the inadequacy of other items of the contract works is generally covered under CAR takaful.

Period of Cover
The cover attaches as from the commencement of work or after the items entered in the schedule of the certificate have been unloaded at the site and terminates when the completed structure or any completed part thereof is taken over or put in to service. The Takaful Operators’ liability for construction machinery and construction plant and equipment commences from their unloading at the site and expires on their removal therefrom. In addition, it is possible to extend the period of cover to include a maintenance period.

Sum Covered
The sum covered must be equal to the amount stated in the building contract, plus the value of any construction material supplied and/or additional work performed by the principal. Any increase in the contract sum must be notified immediately to the Takaful operators in order to avoid under takaful.
Usually, separate sums covered are fixed for:

-construction machinery and construction plant and
- existing buildings and clearance of debris,

Third party liability cover is likewise subject to a separate limit of indemnity for any one accident or series of accidents arising out of one event.

Indemnification
The Takaful Operators indemnify the Participant for the expenses incurred for eliminating loss of or damage to the property covered. However, expenses for rectifying deficiencies that would have been incurred anyway - without the occurrence of such loss or damage - are not indemnified.

Moreover, a so-called deductible is agreed on for each CAR takaful. This is the share in each loss which the Participant has to bear for his own account and which is thus deducted from the indemnity. The purpose of such a deductible is to stimulate the Participant’s interest in loss prevention and to relieve the Takaful Operators from dealing with the many minor losses where the administration expenses incurred would be excessive compared with the indemnity.

Generally, the limit of indemnity is the sum covered unless a limit for each and every loss and/or an aggregate limit for all losses occurring during the period of takaful has been agreed.

Maintenance Period
Usually, the building contract provides for a maintenance period of 12 months after the completed structure has been taken over. For this period maintenance cover may be granted under the CAR certificate. The following types of cover:

Maintenance visits cover
The Takaful operators’ liability during the maintenance period is limited to loss or damage caused by the Participant in the course of the operations carried out for the purpose of complying with the obligations under the maintenance provisions of the contract.

Extended maintenance cover
In addition to the protection provided under maintenance visits cover, this type of cover also includes loss or damage caused during the erection period.

PERIOD OF COVER
24 months - 25% loading
36 months - 50% loading
Extensions - charge pro-rata

EXTENSIONS (LOADING)
Expediting Expenses - 10%
Vibration Weakening - Between 10% to 20% depending on proximity
and removal support of third party property (Decline extension if third party property is immediately adjoining the risk)
Vibration weakening - Between 10% to 20% depending on and conditions.