Renovating a house may seem a simple process in terms of insurance but there are common misconceptions surrounding it.
We are asked a couple of questions regularly:
I have household insurance why do I need a different policy? Standard household insurance isn’t designed for large scale renovation work, so you must inform your insurer before your project starts. In most cases they would look to cancel your policy and while some may continue cover, they will more than likely do so on a restricted perils basis. Some insurers will have a clause built into the policy so when work goes over a certain sum insured cover will cease or be restricted.
Similarly should the property be unoccupied either throughout the build or for long periods during it, they will restrict cover generally to FLEA (fire, lightning, earthquake and aircraft) making the cover relatively worthless. Most home insurance policies will have a limit on the time that cover is provided for periods of unoccupancy, which will be vary between 30, 60 or 90 days as a rule.
My builder has a contract works insurance policy so I don’t need my own insurance? The simple answer is yes you do. Your builder’s contract works policy will only cover materials they purchase and in terms of liability only cover any accidents they are held liable for. Your contractor cannot cover the existing structure as they have no insurable interest in it, nor can they cover accidents that occur on site that you are held liable for.
Public and employers liability are often forgotten parts of insurance. Thankfully claims are few, but should an accident occur on site, they can easily run into six figures once legal costs are factored in, and particularly if long term care or physio is required. It’s easy to dismiss, however something as innocuous as providing a set of ladders to a contractor which they subsequently fall from and break an ankle can lead to a large claim.
A further example of a claim we experienced was a kitchen designer working on site, who fell over an exposed floor beam resulting in a broken leg. This led to a five figure claim.
Is there anything else I need to think of before undertaking a renovation? Yes there are a number of additional things to think about. If the work you are undertaking requires a party wall agreement it is worth looking at some additional cover. JCT clause 21.2.1 or 6.5.1 as its now known put simply is non-negligence insurance. It is designed to cover damage to neighbouring homes where neither you nor your contractor are at fault for the incident. It is particularly useful if you are extending a semi or terraced house where the chances of damage are enhanced.
Whether you decide to take additional JCT 6.5.1 cover or not I would suggest drawing up a schedule of dilapidation. This means looking over your neighbours’ properties and documenting any existing damage such as cracking, by taking photos including internally if your neighbours will allow it. This will stop any frivolous claims for pre-existing damage.
The last thing to be aware of is if your contractor asks you to sign a joint contract clause either 5.4 A, B or C for example. I would expect to see this in larger builds where you pay your builder in stages as they complete parts of the project. Signing the clause impacts on your insurance as it effectively makes the contractor a joint insured alongside the policy holder.
This means that if an incident occurs which has been caused by your contractor the insurer cannot claim its losses back from the contractor as it would normally. In insurance terms this is subrogation. If you do sign the clause make sure you inform your insurer as it can impact on the cover or the premium you will pay for it.
ProAktive are experts in renovation insurance so if you have any queries regarding the project you are undertaking please do not hesitate to contact us on 01302 346831 or via email selfbuild@proaktive.co.uk