Does CAR insurance cover LAD if a site accident delays the project?

No. A Contractor All Risks policy pays to repair or replace physical damage to the works. It does not pay the liquidated and ascertained damages your employer deducts when you finish late. The standard CAR wording used in Malaysia excludes consequential loss, and it names penalties, delay and loss of contract inside that exclusion.

“consequential loss … including penalties, losses due to delay, lack of performance, loss of contract”

LAD is written into the building contract, not the policy. Under a PAM or JKR form it runs at a rate fixed in advance, the employer does not have to prove any actual loss, and it is deducted straight from your progress payment. That is a contractual debt. Insurance does not touch it.

Three situations contractors run into

1. Damage happens, and the delay follows

A fire in the site store. Formwork that gives way. A crane that drops a load onto finished work. CAR responds to the physical damage — repair or replace, less salvage, less the deductible. The three weeks you then lose clearing the site, reordering materials and redoing the work are not part of that payout. The LAD clock in your contract does not pause because you had an insured loss.

2. Delay with no physical damage

Supply held up. Labour short. Site closed by an order. Here CAR pays nothing at all — and not because of the delay exclusion. The policy only responds to unforeseen and sudden physical loss or damage. No damage, no trigger. Worth knowing too: where work has actually stopped, the general exclusion for cessation of work can bite even if something is damaged during the shutdown.

3. Damage happens and you want the time back

The route is not the policy. It is the extension of time provision in your contract — that is the only thing that moves a completion date. Insurance still affects the outcome, but indirectly: how fast the loss is documented and settled decides how fast you can reinstate, and the claim file is the evidence your EOT application rests on. A claim that drags is a delay that grows.

What actually reduces the exposure

Two things sit inside the policy and get skipped almost every time:

The sum insured has to be the completion value. Not the value of work done so far, and it must include materials supplied by the employer. Fall short and the payout is scaled down in proportion — and under the standard wording every object and cost item is scaled separately, so one under-declared line does not get rescued by another that was over-declared. A reduced payout is a slower reinstatement, which is a longer delay, which is more LAD.

Expediting costs have to be agreed in writing before the loss. Overtime, night work, work on public holidays, express freight — the standard wording only covers these if they were agreed in advance. This is the one clause that directly buys back calendar days, and it is the one most contractors discover they never had, on the day they need it.

Clause references are to the standard Contractor All Risks wording in use in Malaysia. Your own policy schedule and endorsements can differ — the wording that governs your claim is the one attached to your policy. This page is general information, not advice on a specific contract.