Skip to content

Contractors All Risk - Premium Calculation

Pricing Methods

Method 1: Simplified Pricing (Current Business Practice)

For Villa Construction:

Contract Value Premium (incl. VAT)
Below AED 2,500,000 Minimum AED 735
Above AED 2,500,000 Underwriter referral required

Application: - Quick pricing for residential villa construction only - Fixed minimum premium for standard villa projects - Above AED 2.5M threshold = custom underwriting assessment

Above Threshold Requirements: - Detailed project documentation - Contractor track record review - Site risk assessment - Custom rating factors applied

Method 2: Detailed Rating Method

For all construction types, Premia uses complex rating factors based on multiple variables.

Rating Factors

Base Rate

Base premium calculated as: 

Base Premium = Contract Value × Base Rate × Adjustment Factors

Base Rate Range: 0.15% to 0.35% depending on project type

Minimum Premiums: - Product 6010: AED 5,000 - Product 6020: AED 10,000 - Product 6030: AED 3,000

Project Type Multiplier

Project Type Multiplier
Residential 1.00
Commercial 1.20
Industrial 1.50
Infrastructure 1.80
High-rise (>15 floors) 2.00
Tunneling 2.50

Duration Factor

Project Duration Factor
Up to 12 months 1.00
12-24 months 1.10
24-36 months 1.20
36-48 months 1.30
Above 48 months 1.40

Location/Zone Factor

Zone Risk Level Factor
Zone A Low risk 1.00
Zone B Medium risk 1.20
Zone C High risk 1.50
Zone D Very high risk 2.00

Contractor Experience Factor

Experience Factor
New contractor 1.20
1-3 years 1.10
3-5 years 1.00
5-10 years 0.95
10+ years 0.90

Discounts & Loadings

Available Discounts

Discount Type Percentage
Safety certification 5%
No claims (3 years) 10%
Multiple projects 10%
Advance payment 3%

Maximum Total Discount: 20%

Risk Loadings

Loading Type Percentage
Poor claims history 25%
High-risk methods 15%
Substandard materials 20%
Inexperienced team 10%

Maximum Total Loading: 50%

Additional Covers

Optional Coverage Rates

Cover Rate Basis
Third Party Liability 0.05-0.10% On TPL limit
Maintenance Period 25% Of base premium
Testing Period 10% Of base premium
Existing Property 0.10% On property value
Debris Removal Included Up to 10% of claim

How Add-Ons Are Priced

Maintenance Period: 

Maintenance Premium = Base Premium × 25%

TPL Coverage: 

TPL Premium = TPL Limit × (0.05% to 0.10%)

Testing Period: 

Testing Premium = Base Premium × 10%

Premium Components

What's Included in Base Premium

  • Section I: Material Damage coverage
  • Basic third party liability
  • Debris removal (up to 10% of claim)
  • Professional fees
  • Policy fees
  • VAT (5%)

Optional Add-Ons (Extra Cost)

  • Enhanced TPL limits
  • Maintenance period coverage
  • Testing and commissioning
  • Existing property coverage
  • Surrounding property damage
  • Advanced loss of profits

Calculation Examples

Example 1: Small Villa (Standard Rate)

  • Contract Value: AED 1,500,000
  • Project Type: Residential villa
  • Premium: AED 735 (minimum with VAT)

Example 2: Commercial Building

  • Contract Value: AED 10,000,000
  • Project Type: Commercial
  • Duration: 18 months
  • Zone: B (Medium risk)
  • Contractor: 5 years experience
  • No claims history

Calculation: - Base Rate: 0.25% - Base Premium: AED 10,000,000 × 0.25% = AED 25,000 - Project Type: × 1.20 = AED 30,000 - Duration: × 1.10 = AED 33,000 - Zone: × 1.20 = AED 39,600 - Experience: × 1.00 = AED 39,600 - No claims discount: -10% = AED 35,640 - Premium (excl. VAT): AED 35,640 - Premium (incl. VAT): AED 37,422

Example 3: High-Rise Building

  • Contract Value: AED 50,000,000
  • Project Type: High-rise (20 floors)
  • Duration: 30 months
  • Zone: C (High risk)
  • Contractor: New (no experience)

Calculation: - Base Rate: 0.30% - Base Premium: AED 50,000,000 × 0.30% = AED 150,000 - Project Type: × 2.00 = AED 300,000 - Duration: × 1.20 = AED 360,000 - Zone: × 1.50 = AED 540,000 - Experience: × 1.20 = AED 648,000 - Premium (excl. VAT): AED 648,000 - Premium (incl. VAT): AED 680,400

Underwriter Referral

When Custom Assessment Required

  • Villas above AED 2.5M
  • High-risk project types
  • Complex construction methods
  • Poor contractor track record
  • Challenging site conditions
  • Large contract values

Assessment Process

  1. Review complete project documentation
  2. Apply rating factors
  3. Assess special conditions
  4. Determine final rate and premium
  5. Approve or decline

Next Steps