Your self-build and extension insurance questions answered
If you’re in the planning stages of a self-build housing project or a home extension, insurance considerations need to be made to ensure you have the right cover in place before work starts and throughout the build period. This blog covers the most common questions around site insurance and the importance of not relying on your existing building insurance policy or your builder’s insurance.
Adding site insurance to the cost of your extension might not be something you’ve either thought about or made a priority for your upcoming project. But it is wise not to solely rely on your standard building insurance to cover the cost of any loss or damage as, more often than not, they will not pay out on a loss involving a property under development.
1. Can I just rely on my existing home insurance?
Home insurance is not designed to cover building projects. It specifically excludes alterations, renovations and extensions, as well as cover for unoccupied properties. This has been regularly highlighted on various TV programmes such as BBC’s Rip Off Britain. A couple’s build project was completely destroyed by fire and their home insurer refused the claim.
2. Surely my builder’s insurance will cover me?
Your builder may say they are ‘fully insured’ – and they probably believe it themselves –but the likelihood is they actually only have public liability insurance which covers them in the event they cause damage or injury to a third party following a negligent act, which of course you would have to prove. Being a liability insurance, it doesn’t cover issues like storm damage, arson, theft of materials or plant and equipment or foreseen liability — essentially all the things you really do need to protect yourself against.
3. My plant hire company always insures their equipment, so why do I need to buy more insurance?
The person signing the hire contract is invariably responsible for repairing damaged plant or replacing it if it’s lost or stolen while it is on hire. You are also responsible for the continuing hire charges until it is replaced. If you are hiring a crane and operator, you will be responsible, and even a small crane can cost hundreds of thousands of pounds to replace. Plant, tools and equipment can all be included as part of our site insurance policy.
4. If I declare a lower property value for insurance purposes, will it save me money?
You should insure for the professional reinstatement cost — which is the value representative of a professional contractor clearing the site and rebuilding your project from scratch, including all fees. If an insurer identifies that you have deliberately underinsured, then they will reduce the claim proportionately.
5. If my builder damages my neighbour’s foundations, isn’t this covered by their insurance policy?
This is a huge potential pitfall. If you are working close to your neighbour’s foundations and weaken them, that damage won’t be covered by public liability insurance and you will need to make special arrangements with your site insurance provider to get adequate protection in place.
6. I can’t be held responsible if my builder slips off the scaffold or a ladder, can I?
The Health and Safety Executive has produced clear guidance for self-builders. If you are managing or exercising control over the project yourself, you automatically carry the responsibility and could end up being prosecuted and fined. A worker who is paralysed could be looking to receive compensation running into millions of pounds to cover full-time care and so on. This is why employers and public liability cover is included on most site insurance policies.
7. Does site insurance cover new for old? How does it work?
If an element of the property has to be rebuilt, it will obviously be built new. However, plant tools and equipment are insured on an indemnity basis — so a three-year-old digger will be settled at the replacement value of a three-year-old digger, and not a new piece of equipment. In reality, everyone’s circumstances and projects are going to be different, which is why it’s really important you seek expert advice from a specialist site insurance provider before embarking on your build.
8. If the policy period expires, does the cover automatically renew?
Site insurance provides project-based cover. It isn’t annually renewable and you won’t automatically be sent a renewal notice. If you run out of cover/time you will need to arrange an extension for it.
9. I don’t think I need to bother with site insurance until later in the build – is that right?
This is a short-sighted approach that could end up costing more money. Even if there are only three months to go on your build, the insurer will charge you a premium that is based on the reinstatement cost from the point the work started.
10. How much do utility companies charge for repairing their damaged cables?
Emergency utility repair bills can run into hundreds of pounds — it’s not just electricity, think about gas and fibre-optic cables, too.
Self-Build Zone offers a range of self-build site insurance cover. All of its site insurance policies include public liability and employers’ liability cover as standard. For more information, call 0345 230 9874, or visit the rest of our website selfbuildzone.com.