Home renovations

In a recent survey conducted by international specialist insurer, Hiscox Insurance, it was found that the number of homeowners in the UK choosing to improve their homes rather than move has risen fivefold in the last five years. UK local councils have seen a 29% rise in in the number of planning permission requests over the last ten years.

However, whilst the end result of a renovation project can be the home of your dreams, the risk of damage to your home whilst the work is taking place is increased. For example:

• Contractors may be using welding gear and heat lamps which can increase the chance of a fire occurring.
• There may be times when the roof will need to be left open, exposing it to adverse weather such as a storm and subsequent water ingress.
• The property may be left unoccupied for long periods, increasing the risk of vandalism or theft, either of materials and equipment (such as bathroom or kitchen fittings) or your own personal belongings.
• If the property is without heating, there is an increased risk of burst pipes and water damage in freezing conditions.

It is a requirement of all standard home insurance policies that the insurer is notified of building works that you may have planned during the course of the insurance policy, so it can assess the nature of the increased risk. Failure to do so will invalidate your cover as the insurer will include a specific wording within their policy which excludes cover for loss or damage as a result of structural alteration, repair, renovation or any other building work. This may be for any of the aforementioned, or any of the aforementioned above a specified contract value.

It is likely, particularly for larger projects, that the insurer will terminate the policy and alternative cover will need to be arranged. Even if your home insurer does agree to maintain cover for the duration of the building work, it is unlikely to provide full cover, and will often only provide “FLEA” cover only – damage arising from Fire, Lightning, Explosion and Aircraft. It is also likely to include a “Contractors Exclusion” whereby any damage caused by the contractor is excluded.

Renovation and Extension Insurance cover

A specialist Renovation and Extension insurance policy will provide full cover for the existing structure and contract works all under one policy, and will provide full All Risks cover that your household insurer would previously have provided, including Accidental Damage and Subsidence cover, which is likely to be a requirement of your mortgage. In the unfortunate event of a claim, you will only deal with one insurer, and avoid the scenario of various different parties trying to pass the buck and deny who caused what damage, and which insurer is liable for what claim.

“What about my contractor’s insurance cover?”

A contractor’s Public Liability policy will cover damages that the contractor is legally liable to pay, i.e damage caused as a result of their negligence. If it cannot be proved that damage to your home was caused as a result of the contractor’s negligence, you could be left with a costly repair bill. Also, how confident are you that the contractor is complying with the requirements of their insurance? For example, there may be a maximum height limit that they’re restricted to work within, or an exclusion relating to work with heat. If these restrictions are broken and the contractor’s policy is invalidated, where does that leave you? Likewise, the contractor may have Contractors All Risks cover, but this only provides cover for the contract works, not the existing structure.

At Alastair James Insurance Brokers, we have access to a number of specialist renovation insurance policies that can cater for all manners of renovation and building works and meet the requirements of JCT contract terms.

Top ten insurance claims for renovation and extension projects

1. Theft of building materials and equipment (e.g. bathroom and kitchen fittings).
2. Escape of water (e.g. burst pipes and water sources connected to the home).
3. Storm damage (damage from storms excluding flooding e.g. high winds).
4. Flooding from ground water (flooding from rainfall/storms).
5. Party wall claims (damage to a neighbour’s property where there’s a boundary wall e.g. semi-detached homes).
6. Public liability (e.g. guests at your home injured by a tradesmen).
7. Fire (e.g. caused by an amateur electrician).
8. Ground movement (subsidence caused by building works).
9. Accidental damage (e.g. items being dropped by a tradesman).
10. Malicious damage (e.g. vandalism).

Source – Hiscox Insurance