A notable trend of most of us spending more time at home during Covid-19 is the increase in residential building works projects. Typically such projects are undertaken by people not wishing to move. With a lack of travel and leisure options, the lockdown has made a lot of homeowners re-assess the type of home they want to spend their time in.
What's more, the increased flexibility of remote working has led some to consider moving out of the city in favour of a more rural environment. Bringing modern facilities to a country home could also require significant renovations.
As soon as you think about renovations to your new or existing home you must also consider the insurance implications. It is so often either overlooked or an afterthought, sometimes too late when an uninsured claim may have already occurred. But it should be given priority and the cost of taking out a specialist policy should be considered as part of the cost of the project. We explain why.
Your home insurer will cover the cost to rebuild your home and replace your contents following an insured peril under the policy wording. It has been underwritten under normal circumstances i.e. you living and using your home in a normal way. As soon as you undertake a building project, your home has become a building site and is no longer a ‘normal’ home.
Being a building site presents a different set of risks to the insurers. For example, contractors have access to your property, doors, windows and roofs may be removed and the use of heat (hot works) may be used during the project which can present a far greater fire risk. In short, the risk has changed. Your home insurer may reduce your cover or, depending on the value of the contract, may remove cover altogether. This could leave your home, often your most valuable asset, unprotected at a vulnerable time.
So, what are things you should consider?
You should take out a policy that will insure your home during contract works. This is known as the ‘existing structure’ which includes the home itself and any outbuildings, garages, walls. You must consider scenarios, unrelated to the works, that can affect your home such as the breakout of a fire, storm or escape of water damage. You should also review your mortgage documentation. Not having insurance on the structure of your home when renovating could lead to a breach in your mortgage conditions.
These are your household goods and personal property, kept within the home. Again, you must consider a policy that will cover you for situations where your contents could be lost or damaged unrelated to the building works such as fire, storm, escape of water, theft or attempted theft.
Many people will rely on their contractor’s insurance to insure the contract works which are the works in progress along with the materials and fixtures and fittings used in the works carried out at the home. However, you should consider a policy that will allow you to insure the contract works for the full contract value including VAT. Here are the reasons why -
• To remain in control of your most valuable asset.
• A contractor could cease trading half-way through a project, or they may not have renewed their policy.
• Their limits of cover may be insufficient or they may have conditions in their policy that they aren’t adhering to that could leave you exposed.
• There may be grey areas in the event of a claim with two sets of insurers (and possibly loss adjustors) to negotiate on what is contract works and what is part of the original structure.
A specialist policy would provide you with cover, as the property owner, in respect of your legal liability to for any injury or damage to others.
This is also known as Party Wall cover (a wall common to two adjoining buildings or rooms). You may need to consider this if you live in a terraced home where damage to a neighbouring property occurs due to the works that are being undertaken, but where the cause of such damage is unknown i.e. it is not as a result of the negligence of the contractor. Such damage can be incurred by subsidence, lower of groundwater, collapse or vibration.
If you are using one of the Joint Contract Tribunal Contracts for your contract works you should tell your insurer. A specialist insurer will be able to accommodate JCT requirements as set out in the contract.
We work with homeowners, architects and project managers to deliver tailor-made policies from flexible and specialist insurers. These policies take into account specific features of the existing structure of the home, its contents, the contract works, liabilities and JCT requirements under one ‘all-risks’ policy. Our ability to advise how to protect the existing structure and insure the contract works under one policy ensures no gaps in cover or grey areas. This allows a cleaner and simpler claims process should an unfortunate, insured event occur.
If you'd like a no-obligation review of your insurances before starting a project, please get in touch with us here.