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Contractors All Risk - Endorsements

Endorsement Types

Common Mid-Term Changes

  1. Contract Value Changes
  2. Increase in project scope
  3. Decrease in contract value

  4. Additional works

  5. Project Period Extension

  6. Project completion date extension
  7. Extended coverage period

  8. Maintenance period additions

  9. Project Details Updates

  10. Contractor name changes
  11. Site address corrections

  12. Owner information updates

  13. Coverage Modifications

  14. Add equipment or machinery
  15. Include additional structures

  16. Extend geographic scope

  17. Cancellation

  18. Project abandoned
  19. Completion before end date
  20. Non-payment

Premium Adjustments

How Endorsement Premiums Are Calculated

For Contract Value Changes: - Additional premium = Increase × Rate × Time Factor - Pro-rated for remaining project period

For Period Extensions: - Additional premium = Original Premium × Extension Factor - Based on additional months of coverage

For Coverage Additions: - Additional premium quoted separately - Added to existing policy premium

Cancellation and Refunds

Refund Methods

Short-Period Rate Method

For early cancellations:

Period Active Premium Retained Refund
Up to 1 month 25% 75%
1-3 months 50% 50%
3-6 months 75% 25%
6+ months 100% 0%

Note: Construction projects typically use short-period rates due to concentrated risk in early stages.

Pro-Rata Method

For completed projects: - If project completes early - Clean completion (no claims) - Pro-rata refund on remaining period

Formula: 

Refund = Premium × (Days Remaining ÷ Total Days)

Refund Processing

  1. Cancellation/completion request received
  2. Refund method determined
  3. Premium adjustment calculated
  4. Refund processed
  5. Commission adjusted accordingly

Endorsement Workflow

Processing Steps

1. Request Initiation - Change request received - Type of endorsement identified - Documentation collected

2. Assessment - Impact on coverage evaluated - Premium impact calculated - Underwriter approval if needed

3. Approval - Standard changes: Auto-approved - Material changes: Underwriter review - Major changes: Senior approval

4. Issuance - Endorsement document generated - Policy updated - Customer notified - Premium/refund processed

Business Rules

Contract Value Increases

Up to 25% increase: - Additional premium calculated - May not require full underwriting review - Pro-rated for remaining period

Above 25% increase: - Full underwriting review required - May need new survey - Treated as material change

Period Extensions

Up to 3 months: - Standard extension premium - Usually approved if project progressing normally

Above 3 months: - Requires justification - Underwriter assessment - May need site inspection

Cancellation Rules

Voluntary Cancellation: - Notice period required (typically 7 days) - Short-period rates apply - No refund if over 50% expired

Project Completion: - Early completion notification required - Pro-rata refund if significant time remaining - Final inspection may be required

Commission Impact

On Additional Premium

  • Commission paid on additional premium
  • Same percentage as original policy
  • Credit note issued

On Refunds

  • Commission clawed back on refunded premium
  • Short-period or pro-rata method used
  • Debit note issued to broker

Common Scenarios

Scenario 1: Project Extension

  • Original period: 12 months
  • Extension needed: 2 months
  • Additional premium calculated for 2 months
  • Underwriter approval obtained
  • Endorsement issued

Scenario 2: Scope Increase

  • Original contract: AED 2,000,000
  • Additional works: AED 500,000
  • New contract value: AED 2,500,000
  • Additional premium on AED 500,000
  • Pro-rated for remaining period

Scenario 3: Early Completion

  • Project period: 12 months
  • Completed: 8 months
  • Short-period rate: 75% retained
  • Refund: 25% of premium
  • Commission clawed back on refund

Next Steps