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Allowing For Insurance Costs When Renovating

By: Chris Hogan MSc - Updated: 11 Oct 2012 | comments*Discuss
Property Renovation Renovate Homes

There are a number of different areas where insurance cover is worth considering for a renovation project. Apart from anything else, ordinary household insurance won’t normally allow a property to be unoccupied for more than thirty days. That could happen alarmingly quickly if you’ve moved out of the house temporarily, and there’s a delay in the project.

As well as site insurance to cover accidents and damage while you are engaged in the work there’s building insurance for when it’s completed and, for big jobs, contingency insurance.

Site Insurance

For most renovations site insurance is the most relevant. There are a number of different aspects to the available cover and it’s important to get quotes from a number of different companies before choosing. The hardest thing is to try to compare like with like because, just like any other insurance, all the companies have different excess choices and levels of cover, all of which affect the premium payment.

Site insurance policies will usually cover you for some or all of the following:

  • Theft or damage of plant, tools and equipment.
  • Damage to partly completed works and temporary works as part of the project (by a severe storm, for example, or fire).
  • Damage to the existing structure if you are extending or developing a house rather than building from scratch.
  • All risks on employees’ or contractors’ tools and possessions, and yours too.
  • Employers and public liability.
  • Damage to temporary buildings such as caravans or mobile homes on site
  • Legal expenses.
  • Personal accidents.
It’s up to you to decide which risks you think are worth covering and which aren’t and then find the right policy to suit. If you’re going to do a lot of the work yourself, for example, it would be madness not to at least insure yourself from injury.

Although it’s not something you might have thought about initially, liability cover is more important than ever. The UK seems to be embracing the USA’s ‘sue on sight’ culture and if a wall you were building collapsed and damaged a neighbour or their property, then it’s more likely these days that it will be ‘lawyers at dawn’.

Buildings Insurance

If you are building what is effectively a new home, you can get a ten-year policy to warrant the property against structural damage, similar to the ten-year NHBC guarantee that’s offered on new houses. Many renovation projects so drastically alter the property that this is a wise move, particularly if you are selling on for a profit.

Some site insurance policies are hybrids, they act as site insurance while the project is being built, then convert to building insurance once it’s finished. This sounds like an easy option but you should take care to compare quotes to make sure you’re not being charged more than two separate policies.

Special Cases

There are other specialist insurance policies that are aimed more at the professional developers but are worth considering if you are embarking on a major renovation. One is contingent sub-contractor cover, which covers you if your contractors insurance fails. The other is contingency cover for your architect, which again will pay out if their insurance fails.

Where to Find the Policies

As this is a smaller market than ordinary household or car insurance, it’s a little harder to find companies that provide these policies. If you already have an insurance broker it’s worth asking them if they can find someone, even if it’s not something that they advertise. If you’re funding the project by borrowing from a firm that specialises in property development lending, you may find that they can recommend someone.

An Internet search for ‘ property development insurance’ will yield a number of companies operating in the areas. Searching for ‘self-build insurance’ will also throw up a number of companies in that field who also cover larger renovations.

Take your Time

Finally, remember to shop around, read the small print carefully and compare as many policies as possible. You may be able to save a considerable sum of money by finding a policy that just fits you nicely so don’t just plump for the first one.

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