Self-build and renovation insurance. All you need to know.
When carrying out a self-build or renovation project, many people believe that their builders and contractor will have insurance to cover the project; or that a home insurance policy will cover a property that is undergoing a renovation. However, this isn’t the case and, there are only a handful of companies out there that can provide you with the advice you actually need and the product that you are looking for.
Last year, we Homebuilding & Renovating Magazine published an advisory article by Self Build Zone to clear up some myths. Here some of the common questions we get asked.
“My Contractor has Public Liability insurance, so I’m covered” – Think again. Public Liability covers the contractor or tradesmen against his liability to you for a negligent act error or omission and you must prove their negligence. What it doesn’t cover is a property that is damaged by accident, a fire, flood, storm, etc or incidences of theft from site. You will have no cover if you cause an injury to someone or damage a neighbour’s property.
“My contractor has Contractors All Risks Cover, so I’m covered” – Possibly. But only if the contractor has a valid ‘Contractors All Risks’ insurance policy, with a limit that meets or exceeds the full rebuilding cost of the project. As long as there is a written contract between both parties stating that they are responsible for the whole project (to the point of handing you the keys to a completed property), you should be OK. However, if that contractor is building the shell and you are taking over from there, you will have no cover once they have left the site.
Conversions, renovations or extensions all involve an element of existing structure that needs to be correctly insured. For example, the house that’s being extended, the barn prior to conversion works and so on. It’s important that the existing structure gets correctly insured and this is especially true where an extension or remodelling project is concerned.
Common misconceptions – Your home insurance covers the extension works during construction –No! in fact most home policies exclude alteration and renovation as standard. If you advise your home insurer they may offer you some cover but only on a named perils Fire, Lightning, storm etc. basis so a collapse while knocking through will not be covered.
What policies are available?
A Site Insurance policy is a specialist insurance product otherwise known as a Contractors All Risks Policy – it’s designed to cover projects like yours. By the very nature of the projects you are carrying out they are quite complex and so don’t read like Home & Contents policies. They normally cover All Risks of Physical Loss or Damage, which means literally All Risks and is considerably better than just Fire, Flood Storm etc which is called a named perils policy. A Site Insurance policy can usually be extended to include existing structures on an All Risks basis.
A 10 Year Structural Warranty is a policy that covers a house against defects in the design process, materials used or the actual workmanship itself causing major damage along with defective underground drainage and defective weatherproofing. It runs for 10 years from the point you receive your Completion Certificate and enables a prospective purchaser to obtain a mortgage on the property in the event you sell it on.
For example:- If your home is flooded in a storm – then your home insurance pays for it, but if that flooding is deemed to be caused by the roof collapsing because it was not correctly braced when built that is classed as defective workmanship and would be excluded by the home insurer. They would simply suggest you sue the builder, which in raw terms is you. This is why structural warranty is so important on self-build properties.
The warranty provider checks the design of the build and the construction using a series of Technical Audits to make sure there is no defective workmanship, or materials. Defects identified along the way must be remedied prior to issuing cover.
A warranty provider can often facilitate the handling of the Building Regulation plan check and site inspections by an approved inspector so you don’t have to use the Local Authority. You can normally save money following this route because if you do decide to use the local authority, the warranty provider still has to do warranty inspections alongside the local authority so you effectively get charged twice for the same thing!
Arrange the warranty early on! Basically, the premiums escalate the further through the project you leave it. Whilst it is possible to cover completed properties on a structural warranty retrospectively, it can be an expensive option when compared to purchasing it at the start of your project.
Still got questions? Contact us today and one of our experts can provide further advice and guidance.
Read the full article here: https://www.homebuilding.co.uk/choosing-insurance-for-a-self-build-renovation-or-conversion-project/