Property renovations and insurance

Property renovations are exciting and can enhance your quality of life as well as potentially add value to your house. However, dream renovations can turn into a nightmare if not properly insured. We asked Beth Clerkin, director at Bloom Insurance in Cheshire to give you the low down on what you need to consider...

Projects that require renovation insurance are:

  • Extensions
  • Internal home renovations
  • Conversions for example barns, lofts and basements

Why is it so important to have renovation insurance?
As a general rule, carrying out structural works of any kind can impact your home insurance. It is important to take advice on how your project may affect your cover and what extra protection you need. Most people think that the builder’s insurance will protect them for when things go wrong, this is not always the case. Builder’s insurance may only cover their liability but not be include non-fault damage to the work carried out. You could therefore be liable for damage or injury.

Before works begin, you should contact your existing buildings insurance provider as they will want to know various details such as:

  • The estimated cost
  • A description of works
  • The duration of contract
  • Occupancy during the works
  • Type of contract in place with the contractor
  • Who is your contractor?

Some insurers can support with smaller more decorative projects - but when works reach a higher cost or, include structural changes, they will normally either restrict cover or withdraw cover entirely. If anything goes wrong and your cover is restricted, there is the issue of proving that the contractor is negligent for their insurance to cover the damage. This could take months or even years, in the meantime leaving you with a project that isn’t completed. Renovation insurance can be taken out to protect you for a loss no matter who is at fault.

Contract All-Risks cover
Contract works cover can be taken out to cover you for structures, materials and fittings. This is an All-risk cover that means you are protected should anything happen. Most people assume that the contractor company will have an All-risks policy, but as stated above this is not always the case.

Most contractors will have liability cover to protect them should they be liable for damage or injury, but this doesn’t necessarily cover such things as materials. If the contractor does have an All-Risks policy, then it is important that the sum’s insured figures are such that the existing property, the cost of the works and the materials are fully covered. Existing properties may be covered by the contractor’s policy, but this tends to only cover you if the contractor is deemed liable. Therefore, not covering such things as storm or ingress of water.

Now to your personal contents…..

Staying at home whilst works are carried out
If you are going to live at home during the works, then your contents insurance may also be affected. Having works done increases the risk of accidental damage as well as theft. Insurers may continue to cover your belongings BUT may add some terms or exclusions for example: Valuables are only covered for theft if locked in a safe or on your person. Theft loss is only covered if there are signs of forcible or violent entry to the house.

Moving out - the house is unoccupied
If you decide to move out then you could find that your insurer will look to cancel or add terms to your current insurance. Renovation insurance can have include contents cover BUT this is normally only for general furniture so paintings, jewellery and valuables would normally need to be removed and insured elsewhere. Placing contents into storage is an option BUT you must make sure that your insurance provider is comfortable with insuring your items whilst there but also in transit.

Moving into rented accommodation
If you decide to move your contents to rented accommodation, then you could look to move your current insurance to this address to cover your contents.

Liability cover
It is important that you check that all contractors have their own liability insurance. If you ‘employ’ some trades yourself then you are deemed an employer so could be liable if negligence led to injury. Within renovation/contract All-Risks policies public and employers liability can be included.

Party Wall Insurance?
This is also known as JCT 6.5.1 Non-Negligent Liability OR JCT 21.2.1. It is a type of insurance to cover damage where no one is to blame. It was introduced after the Party Wall Act 1996 – providing a framework to prevent and resolve disputes surrounding party walls. This includes boundary walls and excavations close to neighbouring or adjoining properties. The act covers certain scenarios that need to be reviewed before any works commence to ascertain if cover is needed.

JCT / Joint Contracts Tribunal
This is a type of contract that tends to be used for a single one-off project. There are different versions depending on what type and cost the project is. These contracts help to outline the project details such as what type of security will there be, when will the work start/finish etc. There are insurance requirements within the JCT contracts that need to be fulfilled, often requiring that the policy be in joint names of the contractor and the property owner.

1. Ask all contractors to include their insurance cover when providing a quotation.
2. Spend time getting references about your favoured contractors.
3. Don’t assume that the contractors insurance covers you fully – even if they tell you it does.
4. Get it all down in writing even if you don’t use a ‘formal contract’.
5. Contact an insurance broker for support well in advance of the project starting.

Insurance provides you with the peace of mind that you are protected should anything happen. Bloom Insurance are on hand to support with any questions or concerns you may have. We work with clients to protect you and your assets and offer a friendly service without obligation.