What you need to know about house insurance while you're renovating your property

What should you consider when you begin a renovation project?

Embarking on a new project can be hugely exciting, especially when you have found the right contractor and project manager. There are real benefits to using architects and contractors who understand historic buildings, the sensitivity required to maintain their character and the costs of employing skilled craftspeople and specialist building materials.

If your property is a listed building, a protected structure or it stands within a conservation area, you must have the right permissions in place, unless you are simply replacing or repairing with identical materials and design — what is known as ‘like for like’ repair. If you carry out work that requires consent and you don’t have it, you can face fines, criminal prosecution and be forced to reinstate the original building.

Do you need to tell your insurer about your renovation project?

Whatever the scale of your project, you should ascertain what is included in your existing insurance. Insurers will generally allow for a certain level of work without needing you to inform them, but once the value exceeds their limit (which varies enormously across insurers), you must let them know or your cover could be invalidated.

The reasoning behind this is that buildings are more vulnerable during works — the devastating fires at Notre-Dame and the Glasgow School of Art happened during restoration. Always contact your insurer if the work is structural, regardless of projected costs, because structural claims have the potential to be large.

Can you rely on your contractor’s insurance during the build?

Risks for the homeowner, contractor and project manager are intertwined on large-scale projects. If something goes wrong, it is in everyone’s interests that delays to completion are minimised, but if it isn’t clear who is responsible for the claim, there is huge potential for conflict and financial loss.

Traditionally, homeowners relied on their contractor’s insurance during a build. However, this can leave them in a very vulnerable position for several good reasons:

• During works, home insurance is often limited to basic perils — fire, lightning, explosion and aircraft — but other perils, such as theft and flood, are excluded.
• A contractor’s insurance will only cover mistakes made by the contractor.
• If the contractor failed to comply with their policy conditions, cover is invalidated and the claim won’t be met.
• If the claim is caused by a peril such as fire, where it may be impossible to establish how it started, both your insurer and the contractor’s own insurer may dispute responsibility, thus delaying the project and placing financial pressure on you and your contractor.

To prevent these issues occurring, specialist renovation insurance provides an excellent solution for large-scale projects. This type of policy is designed to act as an umbrella policy, paying out first, no matter who or what caused the claim.

What is the advantage of a renovation works policy?

A renovation works policy is taken out jointly by you and your project manager or architect and has numerous advantages:

• There is no long, draw-out dispute about who was responsible for the claim.
• There is only one insurer and your renovation works policy will pay out first if there is a claim.
• Your home insurance policy will not be limited to basic perils.
• A renovation works policy protects you if the contractor goes into administration or walks off the project.
• You will be compensated immediately and can, if necessary, appoint another builder to finish the project.

Planning and protecting yourself against the worst-case scenario at the start can make the experience of renovation and restoration much less stressful.

To find out more about Castleacre insurance, see the website at www.castleacreinsurance.com or call 01787 211155.

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