Welcome to the ProAktive Self Build blog where we hope to bring you news, advice, hints and tips to help you with your self build!
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Sometimes when working on a project, you will need to appoint a third-party contractor to assist you with certain aspects of the project whether it be the construction, insurance (self-build or normal) or supply of materials, to name a few. These experienced specialists offer their products or services at a price, knowing that the chances are the average person would struggle to replicate the quality for the same price. Third party contractors can be especially useful in complicated areas like specialist self-build insurance or safely supplying rare or heavy materials for a project. However, third parties can also be problematic if they do not deliver.
A project can go from nearly finished and on budget to never being finished and massively over budget in a matter of months if a contractor’s finances are not secure. In the case of Carillion, their finances looked relatively ok for a firm their size right up until the collapse with only a few very small warning signs. Carillion were too optimistic in taking on risky contracts and relied too heavily on borrowing to offset their huge pension deficit. At a certain point the banks said enough is enough and refused to lend them any more money and Carillion was left in serious financial difficulties. This highlights the importance of properly vetting your contractors or suppliers as a little bit of time spent researching and investigating may be able to save yourself time and money.
So how do you check a third-party contractor is financially sound? The first place to look is the Company House website. Almost always the company will have a page on Company House. On there you will be able to see some very basic financial accounts which at least gives you the peace of mind the finances are being processed correctly and the company is profitable. However, this is often not enough to be sure. Further steps can be taken to achieve peace of mind such as looking at their track record and seeing what their previous clients have said about them, tax returns, current debts and debt expiry dates, details of any subcontractors and looking at any other contracts they are currently working or are due to work on in the future.
Remember to always carry out as thorough checks as possible when it comes to utilising a third party. It is crucial to check for strong finances, but it is also equally as important to check for reviews of what others have previously said about a third party. Here at Proaktive we pride ourselves on great customer feedback and that often means clients come to us first for their insurance needs. If you have a project you’re planning, then why not get in touch and we will be more than happy to provide a self-build insurance consultation.
Early this month saw the collapse of Alpha Insurance who supplied 10 year structural warranty insurance. This means that anyone purchasing a policy through Alpha is effectively left without cover and are probably still unaware. As yet no plans have been released on how customers will be affected going forward.
A warranty is designed to cover you against structural defects that occur within 10 years of completion so the importance of purchasing a policy with A-Rated insurer cannot be underestimated.
Put simply, an unrated insurer is one that does not carry an insurer financial strength rating given by international rating agencies, such as Standard & Poor’s 500 index , A.M. Best or Fitch Ratings. While it isn’t a perfect system the insurers rating provides an assessment of the financial strength of an insurance organisation and its ability to pay claims to its policyholders.
If you have an Alpha insured warranty & you sell your house within the 10 year period, the warranty could be an issue as the rights under the Financial Services Compensation Scheme will not apply to the new owner. Anyone purchasing the property within the first 10 years that also require a mortgage will find themselves unable to do so without a structural warranty in place at the insistence of the finance provider.
This effectively means you will have to buy a retrospective warranty which will be more than your original policy due to it requiring an expensive completed housing survey.
If you are affected by the collapse of Alpha and require advice or a quotation please do not hesitate to contact Andy or Beth on 01302 346831 or via email email@example.com