Is own plant and machinery covered under CAR?

Only on two conditions. First, the machine has to be entered in the policy schedule with its own sum insured — a Contractor All Risks (CAR) policy does not automatically extend to a contractor's excavators, generators and site equipment just because they are on site. Second, even scheduled plant is not covered for breaking down on its own; only sudden, accidental damage from an outside cause is paid for.

Only if it is entered in the schedule

Section I of a standard Malaysian CAR wording pays for sudden and unforeseen physical loss or damage to whatever is entered in the Schedule, up to the sum set against each item — nothing wider than that. Plant is not swept in automatically as part of the contract works. It needs its own line and its own figure.

The clause that sets this up is usually headed Memo 1 — Sums Insured. Alongside the full value of the contract works, it separately requires "the replacement value of construction plant, equipment and construction machinery; which shall mean the cost of replacement of the insured items by new items of the same kind and same capacity." Replacement cost of a new, equivalent machine — not what you paid for it used, not its book value. One insurer's product disclosure sheet makes the same requirement in plainer terms, telling the insured to check the sum insured against "the replacement value of construction, plant and machinery (if any)" — that qualifier is the point. Plant is only in the policy if a value for it has actually been declared.

PAM 2018, the standard building contract most private jobs in Penang run on, confirms it from the other direction. Its insurance clause states plainly that "unless otherwise insured by the Contractor, the CAR Insurance policy will exclude cover for construction plant, tools and equipment owned or hired by the Contractor or any sub-contractors." Where the employer is the one arranging the CAR instead, the same contract says it even more directly: plant is out unless the contractor pays to insure it separately. (More on what else that contract requires at tender stage on which policies a contractor needs before tendering.)

Put together: nothing about a CAR policy makes plant covered by default. It is covered exactly to the extent it is scheduled, at a sum insured that matches replacement cost — see how the CAR sum insured is actually calculated for how that full-value test works for the rest of the policy too.

The exclusion that catches contractors: breakdown versus damage

Being on the schedule is necessary, not sufficient. Standard Malaysian CAR wordings carry a Special Exclusion to Section I for "mechanical and/or electrical breakdown or derangement of construction plant, equipment and construction machinery." Another insurer's disclosure sheet lists the identical exclusion in near-identical words. It applies regardless of what the sum insured says.

The line that matters is between the machine failing on its own and something happening to it from outside. Take an excavator working a hillside site in Paya Terubong, and two different Tuesdays:

• Its hydraulic pump seizes mid-dig. That is mechanical breakdown. Excluded, on every CAR wording checked for this page — scheduled or not.
• A retaining wall gives way in heavy rain and a section of it comes down on the cab. That is sudden, external physical damage from an accidental cause — the kind of loss Section I is written to pay, provided the excavator is properly scheduled with an adequate sum insured.

A dedicated contractors' plant and machinery (CPM) policy — the kind written specifically for a contractor's fleet — draws the same line but does the fine surgery that the CAR wordings reviewed here don't spell out. Its equivalent exclusion rules out breakdown, failure, derangement and things like "defective lubrication or lack of oil or coolant" — then carves back: "if as a consequence of such breakdown or derangement an accident occurs causing external damage, such consequential damage shall be indemnifiable." So a breakdown is never paid for on its own, but if it goes on to trigger an accident — a part that fails and then strikes something, causing damage beyond itself — that consequential damage can be. The CAR wordings read for this page state the breakdown exclusion flatly, without that carve-back in as many words.

Vehicles licensed for the road are out

Standard CAR wordings exclude "loss of or damage to vehicles licensed for general road use or water borne vessels or aircraft" outright, alongside the same plant exclusion. No carve-back appears in the wording reviewed here — that risk sits with motor insurance, full stop.

A CPM policy narrows the equivalent exclusion slightly: it excludes "vehicles designed and licensed for general road use unless these vehicles are exclusively used on construction sites." So a lorry-mounted crane that carries road plates but never actually leaves the site could, in principle, fall inside a CPM schedule rather than outside it — but that carve-back is not in the CAR wordings checked here, and whether a particular vehicle qualifies as "exclusively used on construction sites" is an underwriting question this page cannot settle. Either way, a vehicle that is actually driven on the public road needs its own motor cover regardless of what the CAR or CPM schedule says.

Hired-in plant: the same rule, not a different one

The sources checked for this page treat hired plant the same as owned plant, not differently. PAM 2018 names both in the same breath — "construction plant, tools and equipment owned or hired by the Contractor or any sub-contractors" — excluded from the standard CAR either way, unless separately insured. Memo 1's plant sum insured doesn't ask who owns the machine either; it just asks for the replacement value of "construction plant, equipment and construction machinery" to be entered. So the insurance answer for a hired excavator is the same as for an owned one: scheduled with its own sum insured, it is covered on the same terms — subject to the same breakdown and road-vehicle exclusions; not scheduled, it isn't.

What none of these wordings answer is a different question: who pays, as between the contractor and the plant-hire company, if a hired machine is damaged. That sits in the hire agreement signed when the machine arrives on site — not in the CAR or CPM policy, and not something this page can assess in general. A hire agreement commonly makes the hirer responsible for damage to the machine while it's on hire, sometimes regardless of fault. The hire agreement decides that liability; the schedule decides whether it's insured. If the agreement puts the exposure on the contractor, insuring against it means putting the hired item on the schedule the same way an owned one would go on.

What a contractors' plant and machinery policy is for

A CPM policy exists to insure exactly this gap. It pays for "unforeseen and sudden physical loss or damage from any cause not specifically excluded" to whatever plant is entered in its own schedule, tested against its own sum-insured memo (same replacement-cost basis as CAR's plant line) and its own repair-versus-total-loss settlement memo. Its exclusion list covers the same ground as CAR's single plant exclusion — breakdown, road vehicles, wear and tear — plus items specific to machinery that a works policy doesn't need: replaceable wear parts such as drill bits and cutting edges, explosion of a boiler or pressure vessel, plant working underground unless separately agreed, and total or partial immersion in tidal waters.

For a contractor whose fleet is a real asset — several excavators, compactors, generators, site vehicles — a standalone CPM schedule is generally the more exact instrument for that fleet than trying to stretch one line inside a CAR schedule to cover it.

Check your own schedule in the next ten minutes

• Pull out your CAR schedule. Is there a line for construction plant, equipment and machinery with its own sum insured figure? If it's blank or missing, none of your own plant is covered, whatever the site paperwork assumes.
• If there is a figure, check it against the cost of replacing the machine new, same kind and capacity — not what you paid for it used. Memo 1 tests it against that, not against book value.
• Check whether that figure includes plant you hire in, or only what you own. If a hire agreement makes you liable for damage to a hired machine, it needs its own place on the schedule too.
• Ask whether you hold a standalone contractors' plant and machinery policy at all, or whether everything is riding on one line inside the CAR. If the fleet is more than a couple of machines, ask what a dedicated CPM schedule would look like instead.
• Read the exclusions against your actual machines — which are road-registered, which work underground, which sit near tidal water. Those apply whether or not the sum insured is right.

Frequently asked

Does Contractor All Risks (CAR) cover my own excavator or generator?

Only if it is entered in the policy schedule with its own sum insured — CAR does not automatically extend to plant just because it's on site. Standard Malaysian CAR wordings require a separate sum insured for the replacement value of construction plant, equipment and construction machinery under Memo 1, and PAM 2018's own insurance clause confirms it from the contract side: unless the contractor insures it separately, the CAR policy excludes construction plant, tools and equipment owned or hired by the contractor. Even scheduled plant is only covered for sudden damage from an external cause, not for breaking down on its own.

Is mechanical breakdown of construction machinery covered under CAR?

No. Standard Malaysian CAR wordings carry a specific exclusion for mechanical and/or electrical breakdown or derangement of construction plant, equipment and construction machinery, and it applies regardless of whether the machine is correctly scheduled. A dedicated contractors' plant and machinery policy draws the same line but is more precise about it: breakdown itself is excluded, but if the breakdown goes on to cause an accident with external damage, that consequential damage is payable.

Is a road-registered lorry crane or vehicle covered under CAR?

No, not under the standard CAR wordings reviewed here — vehicles licensed for general road use are excluded outright, along with water-borne vessels and aircraft; that risk sits with motor insurance instead. A contractors' plant and machinery policy narrows the same exclusion slightly, carving out vehicles that are exclusively used on construction sites, but whether an insurer accepts that for a specific road-registered vehicle is an underwriting question, and any vehicle actually used on the public road needs its own motor cover regardless.

If I hire in an excavator, is it covered the same way as one I own?

For insurance purposes, yes — the wordings and PAM 2018 both treat owned and hired plant the same way: it has to be entered on the schedule with its own sum insured to be covered at all, whether the contractor owns it or hired it in. What these policies don't decide is who pays if a hired machine is damaged and it turns out not to be scheduled — that liability question sits in the hire agreement the contractor signs, not in the CAR or CPM wording.

Exclusion and Memo wording is quoted from standard Malaysian CAR and contractors' plant and machinery policies reviewed for this page; exact wording, carve-backs and endorsements vary by insurer, so always check your own schedule and policy wording. Whether a hired machine's damage is the contractor's liability is a matter of the hire agreement, which this page has not reviewed and cannot assess for any specific hire. Clause references are to PAM 2018; other contract forms are structured differently. This page is general information, not advice on a specific policy or fleet.