Construction All Risk (CAR) Premium Written
Underwriting a CAR policy for a major construction project in Jordan.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Premium Receivable — Engineering CAR | Asset (+) | 35,000.00 | - |
| Written Premium — Engineering CAR | Revenue (+) | - | 35,000.00 |
💡 Accountant's Note
CAR policies cover construction works in progress, plant, equipment, and third-party liability on construction sites. The premium is typically earned proportional to the construction schedule.
Practitioner & Systems Framework
💻 ERP Architecture
CAR policies are project-specific and written for the duration of the construction period (which may span multiple years). The policy admin system must be configured to handle multi-year policies with mid-term adjustments as the contract value changes (due to variations, inflation, scope changes). The premium is typically based on the final contract value plus plant and machinery values. UPR for CAR policies is calculated based on the construction schedule (S-curve) rather than a simple straight-line method, as risk is front-loaded during the active construction phase.
⚠️ Audit Flags
Auditors confirm that the sum insured reflects the full reinstatement value of the works at any point during construction (not just the final contract value). Test that mid-term adjustments in contract value have been endorsed and additional premium collected. For multi-year CAR projects, verify that the UPR methodology reflects the actual exposure at each reporting date (using the S-curve or completion percentage). Confirm that the Defects Liability Period (DLP) is included in the policy period if required.
📄 Required Documentation
Construction contract (confirming contract value and duration), project S-curve (construction schedule), CAR premium computation, mid-term endorsements for contract value changes, reinsurance placement confirmation, and DLP extension confirmation.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.