Main contractor has CAR — does the subcontractor still need its own?

It splits three ways: possibly yes for the works, no for its own workers, never for its own plant. A subcontractor can already be protected for damage to the works if the main contractor's Contractor All Risks (CAR) policy actually names it in the joint names — a real possibility under PAM 2018, not a given. Its own workers are a different matter: the contract puts that insurance squarely on the subcontractor itself, not on whatever the main contractor arranged. And a subcontractor's own plant and tools are excluded from the CAR by name, on every version of the clause, no matter who else is jointly insured.

The works: possibly — but only if the schedule actually names you

Two clauses put subcontractors into joint names on the works side. Clause 19.1 requires the public liability policy to be taken out "in the joint names of the Employer, Contractor, sub-contractor and all interested parties." Clause 20 does the same for the CAR: whichever version survives — 20.A, where the contractor buys it, or 20.B / 20.C, where the employer does — the policy is taken out "in the joint names of the Employer, Contractor, sub-contractors and all interested parties." Both clauses use the plain word "sub-contractor", not the defined term "Nominated Sub-Contractor" that PAM 2018 reserves for a subcontractor the architect specifically nominates under Clause 27.1. On the face of the contract, a domestic subcontractor the main contractor brought in directly sits inside the same joint-names wording as a nominated one.

Being written into the building contract is not the same as being on the insurance policy. What determines who "the Insured" actually is for a claim is the Schedule the insurer issued, not what the contract says should have happened. Take a piling subcontractor brought onto a Penang condo job for three weeks: on paper, Clause 20.A's joint names reach a subcontractor as a class. Whether the CAR Schedule was actually updated to carry his name, or a wording broad enough to plainly capture a subcontractor who joined mid-project, is a separate question — one only the Schedule itself can answer. Ask to see it. Do not assume the contract clause did the work for you.

Clause 20 also requires the CAR to carry the same four endorsements as Clause 19.1(a)–(d): cross liability, third parties deemed, waiver of subrogation, and automatic extension up to the Certificate of Making Good Defects. Being named in the joint names without those endorsements actually attached buys less than it looks like — more on why below.

Your own workers: no — the contract puts that on you

Workers are handled differently from the works, and the difference is where most subcontractors get caught out. Clause 19.2 covers local workmen who fall under SOCSO — this is a registration and contribution duty, not a policy — and it obligates the main contractor to "cause all sub-contractors to comply with the same provisions." Registering your own local staff under SOCSO stays your own job, whatever the main contractor has done for its own workforce.

Clause 19.3 covers local workmen outside SOCSO, and this is where the joint-names pattern breaks. That policy is taken out "in the joint names of the Employer and Contractor" — the subcontractor is not on that list. Instead the clause requires the contractor to "cause all sub-contractors to take out and maintain a similar insurance policy": a separate policy a subcontractor arranges for its own local, non-SOCSO workers.

Clause 19.4, for foreign workers, goes a step further. That policy is taken out "in the name of the Contractor" alone — not even joint names with the employer — "and shall cause all sub-contractors to take out and maintain a similar insurance policy for all foreign workers employed on the Works." Whatever the main contractor's own foreign worker cover says, it is written for the main contractor's own foreign workforce. A subcontractor's foreign workers need the subcontractor's own equivalent policy.

Your own plant and tools: never automatic

Clause 20 excludes construction plant, tools and equipment from the CAR in near-identical language across all three versions. Under 20.A: "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." Under 20.B and 20.C, where the employer buys the CAR, the wording is "unless separately required by the Contractor at his own cost" — same result. The exclusion runs by class of item, not by whose name sits in the joint names. A subcontractor validly named as a joint insured for the works is still not insured for its own plant under that same policy.

Plant can be brought inside a CAR Section I sum insured — standard Malaysian CAR wordings require the sums insured to cover "the replacement value of construction plant, equipment and construction machinery" where those items are entered in the Schedule. But that only happens where someone has specifically scheduled the plant and paid the premium for it. It is an active addition, not something a subcontractor gets by default from being a joint insured for the works.

A piling rig brought in for a three-week job is a clean example. The piling subcontractor may be validly named in the joint names for the works themselves under Clause 20.A, and its rig can still be completely uninsured under that same policy on the same day — plant sits outside Section I unless someone separately arranged it.

Your liability to third parties, and the cross liability question

Clause 19.1(a) requires a cross liability endorsement so that each joint insured — employer, main contractor, sub-contractors — is treated "as though they are separately insured for their respective rights and interest." Standard Malaysian CAR and public liability wordings do not include this on their own; it is an endorsement the contract requires to be added, not something sitting in the base policy text. Without it, a claim where one joint insured is responsible for injury or damage to another joint insured can run into the argument that an insurer cannot pay one of its own insureds for a loss another of its own insureds caused.

Cross liability does not reach into the two carve-outs above. The CAR's third party liability section — Section II — separately excludes liability for "bodily injury to or illness of employees or workmen of the Contractor(s) or the Principal(s) or any other firm connected with the project", and separately excludes "loss of or damage to property belonging to or held in care, custody or control of the Contractor(s), the Principal(s) or any other firm connected with the project ... or an employee or workman of one of the aforesaid." Both exclusions apply regardless of cross liability, because Section II only ever responds to genuine third parties — the public, or property that is not in a connected firm's care, custody or control. A subcontractor's own worker injured on site, or a subcontractor's own tools damaged, were never going to be a Section II claim, endorsement or not.

So cross liability protects against one specific scenario — one insured causing a loss to another insured, where the loss itself is the kind of thing the policy covers in the first place. It does not turn worker injuries or a subcontractor's own damaged property into a covered third-party claim, and it is not a substitute for the subcontractor's own worker insurance or its own plant cover.

What to ask the main contractor for, before you start on site

Four things to check, and one thing to arrange yourself, before sending workers or plant onto someone else's site:

• The CAR and public liability Schedules — not the letter of award. Ask to see the actual "Name of Insured" wording. Confirm your company is named, or that the wording plainly extends to sub-contractors as a class and was updated after you came on board.
• The endorsement schedule. Ask specifically whether the four 19.1(a)–(d) endorsements — cross liability, third parties deemed, waiver of subrogation, automatic extension — are actually attached to both the CAR and the PL policy, not just referenced in the main contract.
• Confirmation in writing, not a verbal assurance. A site supervisor telling you "you're covered, don't worry" has no standing with an insurer if a claim is disputed. Get the confirmation as an email or letter you can keep.
• Your own worker cover, arranged regardless of what you're shown. SOCSO registration for your own local workers and a workmen's compensation policy for any foreign workers — Clauses 19.2 to 19.4 put that on you, not on the main contractor.
• Your own plant and public liability cover for what the CAR and joint names will never reach. Construction plant and equipment you own or hire, and liability to your own workforce, sit outside Section II and outside the CAR by name.

If you're the one pricing a sub-contract and want to know what a main contractor is actually required to carry in the first place, see which insurance policies a contractor needs before tendering.

Frequently asked

Is a subcontractor automatically covered under the main contractor's CAR policy?

Not automatically. PAM 2018's Clause 20 requires the CAR to be taken out in the joint names of the employer, the contractor, sub-contractors and all interested parties, so a subcontractor can be a genuine joint insured for damage to the works. But that depends on the actual policy Schedule naming the subcontractor, or a wording broad enough to plainly capture it, and on the four Clause 19.1(a)–(d) endorsements — cross liability, third parties deemed, waiver of subrogation, automatic extension — actually being attached. Check the Schedule and the endorsement list; do not assume from the contract wording alone.

Does a subcontractor need its own workmen's compensation insurance if the main contractor already has one?

Yes. Clause 19.3 covers local workers outside SOCSO in the joint names of the employer and contractor only — the subcontractor is not on that policy — and separately requires the contractor to cause sub-contractors to take out a similar policy of their own. Clause 19.4 for foreign workers goes further: it is taken out in the name of the contractor alone, and again requires sub-contractors to arrange a similar policy for their own foreign workers. A subcontractor's own workforce is never covered by the main contractor's worker insurance.

Is a subcontractor's plant and equipment covered under the main contractor's CAR policy?

No. Clause 20 excludes construction plant, tools and equipment owned or hired by the contractor or any sub-contractor from the CAR, in near-identical wording across all three versions of the clause, unless it has been separately insured and scheduled. This exclusion applies by class of item, not by whose name is in the joint names — a subcontractor validly named as a joint insured for the works is still not insured for its own plant under that policy.

What does the cross liability endorsement do, and does it cover a subcontractor's own workers?

Cross liability, required under Clause 19.1(a), treats each joint insured as separately insured so that a claim can run between them — for example, where the main contractor's negligence damages property the subcontractor is responsible for. It does not turn a subcontractor's own worker injuries or its own damaged property into covered third-party claims. The standard CAR wording's third party liability section separately excludes bodily injury to employees of the contractor, the principal or any other firm connected with the project, and damage to their property, regardless of cross liability.

Clause references are to the PAM 2018 standard form of building contract. Other contract forms, including the PWD / JKR family used on government work, are structured differently and the clause numbers do not correspond. Wordings described here are standard Malaysian CAR and public liability wordings — your own policy's Schedule and endorsement list govern. This page is general information, not advice on a specific sub-contract.