Construction all risk insurance, usually sold in the United Kingdom as contractors' all risks, covers the work itself rather than the people around it. That distinction is the whole point of the product, and it is the reason a contractor who holds public liability and employers' liability can still be left carrying a fire or a flood on a half finished building with nothing to claim against.
The works, the plant and the materials
A construction all risk policy insures physical loss or damage to the contract works while they are being built, to the materials waiting to go into them, and usually to the plant and tools brought on site to do the job. If a partly built extension is blown down in a storm, if a stack of timber is stolen from a compound overnight, if a fire runs through a first fix, this is the section that pays to put it back. Liability insurance does not, because nobody else's property has been damaged and nobody has been hurt: the loss is to the contractor's own unfinished work.
Why it is not public liability
Public liability answers for your legal liability to other people. Construction all risk answers for damage to the thing you are making, whoever caused it, without anybody needing to be at fault. They sit either side of a line that becomes obvious the first time a claim falls on the wrong side of it. A visitor hurt by a falling scaffold board is public liability. The scaffold and the half built wall it took down are the works. Most contractors of any size carry both, and a building contract will usually require both by name.
Existing structures, and who arranges the cover
The awkward cases on refurbishment and extension work are the parts of the building that were already there. Standard United Kingdom building contracts deal with this explicitly, and which party insures the existing structure depends on which insurance option the contract selects: on new build the contractor normally insures the works, while on work to an existing building the cover for the existing structure and often for the works is commonly placed by the employer under their own property policy. Reading which option the contract has chosen before work starts is not a formality. It decides whose insurer answers when a fire spreads from the new work into the old building.
Questions people ask about construction all risk insurance
Is construction all risk the same as contractors' all risks?
In the United Kingdom market they are the same product under two names, and insurers use them interchangeably. What matters is not the label on the front of the policy but which sections the schedule actually turns on: works, plant, tools, own plant hired in, and existing structures are all separate switches.
Does it cover defective workmanship?
Generally not the cost of putting right the defective work itself. The usual position is that the policy pays for resulting damage to other parts of the works but excludes the cost of redoing the piece that was done badly. That is a liability and warranty question rather than a property one.
Who should arrange it on a refurbishment job?
Whoever the contract says, and on work to an existing building that is frequently the employer rather than the contractor, because their property insurer already covers the structure. The insurance option chosen in the contract is the answer, and it should be settled before anybody is on site.