The first question people have about project insurance is: do I really need it? Well, in the case of home renovation, it depends. Here’s a quick guide to the triggers that will determine whether you require specific renovation cover.
Are you simply planning a cosmetic upgrade, installing a new kitchen or bathroom, or decorating the property using a mix of trades and some DIY?
If so, adding accidental damage cover to your current home insurance should do the job, provided the trades working in your house have public liability cover. Read the policy in detail to identify any limitations (some specifically exclude renovation works).
In general terms, home insurance covers the structural fabric and fixtures against fire, flood, vandalism, subsidence and damage following a forced break-in or theft. An accidental damage policy extends this to include issues unintentionally caused to the permanent elements of your property. But – and it’s a big but – there are always exclusions, one of which is likely to be for faulty workmanship.
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For context, if you inadvertently bash a nail through a pipe while fitting a shelf, you should be able to claim for repair and clean up. But if you’re extending the plumbing to install a new sink and mess it up, you won’t be able to claim for any of the damage or repair, because the insurer will consider the issues to be a result of faulty workmanship.
Home insurance provides cover against your liability as a homeowner, but might not extend to your duties as a renovator. So, even if you think your current policy is sufficient, it’s essential to tell the insurer what you’re doing and get them to confirm you’re covered.
There are two key indicators as to whether you’ll need renovation site insurance:
If the house will be unoccupied, then standard home insurance simply won’t cut it and you’ll definitely need specific cover.
You might still require renovation site insurance even if you do plan to live in the property – particularly if you’re making structural changes, extending or carrying out a lot of the major works yourself.
This specialist form of insurance covers both the new renovation works and the existing structure against the risk of physical loss or damage. So in the worst case scenario, if you bring the whole house down whilst knocking a new opening through an existing wall, you’ll be covered.
If you make a mess of the plumbing and it bursts, then while the part that failed won’t be covered, any resulting damage will be – and that’s the expensive bit. Renovation site insurance will also cover theft of materials (physical loss), including repairing the damage the thieves caused in the process of breaking in.
If you are living in a couple of rooms while you carry out the works then you may still have furniture, clothing and other belongings in the house. Site insurance won’t include these, so you need to keep your contents cover going.
But again, make sure the insurer knows and has confirmed to you they are aware of the works that are going on, as there are likely to be restrictions. There will be a clause in your existing policy regarding dual insurance, so it’s ok to get renovation cover elsewhere.
Both home and site insurance will provide public liability, but one is as owner/occupier while the other is as the owner/renovator. So, if you happen to drop a ladder on your neighbour’s car while cleaning windows, this will be dealt with by standard home insurance – provided you weren’t in the process of carrying out renovations. With site insurance, if you accidentally injure someone or damage their property while renovating, you’re covered.
However, public liability doesn’t cover ‘foreseeable events’. So, you need to carefully consider what impact works may have on neighbours, should things go wrong. If you are making structural changes (such as excavating close to foundations, removing structural supports, or placing steels in a party wall) then you may have responsibilities under the Party Wall Act or Common Law for any foreseeable damage you cause to a neighbour’s property. Such situations require a specific extension in cover, so you must tell the site insurance provider in advance.
Premiums are calculated on the cost of works and reinstatement value of the existing property. For a 1960s house with a reinstatement value (before works start) of £200k and an expected renovation budget of £250k – including cover for a caravan, plant, tools etc – a guide price might be £900 for a 12 month policy.
You’ll purchase the insurance for a fixed period of time. It can usually be extended, but will cease when the project is complete. You won’t get any money back if you’ve purchased 18 months’ cover and finish it all in nine months, so plan the build programme properly to get the duration about right.
|Simon Middleton is managing director of Protek Group. Since starting his career as a site engineer, he has been underwriting site insurance and structural warranty in the self build and construction sector for over 23 years.|