Whether you have bought a property to ‘do up’, or you’re planning to do some renovation work on your home rather than moving, you should always make sure you have the right insurance in place. You will need to think about protecting your property and the public. There are so many potential issues that could crop up. It is important that you take the advice of your insurance broker as this can be a specialist area, especially if there are major structural works or the property is vacant.
Does my house insurance cover building/construction work?
Not always. You must read your policy. Sometimes this cover is not present to reduce the premium. We understand that most home insurance policies will only cover for general decorating and DIY. If you are having major building work, like a loft conversion or an extension for example, you may need to take out additional cover.
Will my insurance cover for accidental damage if I am undertaking DIY?
Not always. As with building work you must read your policy. We’d suggest you check with your insurance broker and make sure you have appropriate cover. It may not provide cover for personal accident or injury either, and don’t forget that accidental damage to contents will most likely be on a different policy to your buildings cover. Triple check and check again, and if in doubt, speak to your insurer in the first instance before carrying out work.
What if my builder damages my property?
Firstly, it is your responsibility to check that your builder has the right insurance and that it is valid and in date. Ask them for a copy of their certificate and check the date and any exclusions. If it goes out of date during your work, ask them for confirmation of renewal. Don’t just trust ‘fully insured’ written on their letterhead or website.
And do not expect your builder’s work to be covered by your own house insurance. Very many policies contain a clause like this one: “CONTRACTORS EXCLUSION CLAUSE – This insurance excludes loss, damage or liability arising out of the activities of contractors.” This is a real quote from a real policy. Pretty black and white. It means that if you’re building an extension and your contractor damages your house or property, you are unlikely to be able claim from your own house insurance and would need to make a claim against the contractor.
The same applies if the builder damages your neighbour’s house or property.
If you have used a formal building contract, this should state the insurance requirements. If in doubt check with your insurance broker. You should always ensure that insurance is in place that is appropriate to the risk and the work, and which provides cover for negligent and non-negligent actions by a contractor.
Does a Party Wall Agreement provide insurance for damage to neighbouring property?
No. Let’s take a case where the work is covered by a Party Wall Award drawn up under the Party Wall etc Act 1996. That places a direct personal liability between the building owner (doing the work) and the adjoining owner for any damage arising. There is no liability arising directly upon your contractor and the party wall award cannot create one.
For example, you build an extension and during the work some damage occurs next door. The party wall surveyors agree its caused by your work and that a financial recompense is appropriate. The liability for that damage and recompense rests directly with you. It may be that you have some specialist insurance cover, but if not you will need to settle the claim personally. Of course you may think that the contractor should pay for the damage but that will be a contractual matter between you and your contractor and their insurers. That is why it is critical to check their insurance at the outset.
The bottom line is that when there is damage arising from your building work, it is you who has the liability and you who will have to take action against the builder. Even then if he goes bust or ceases trading, you may well be left holding the baby, so to speak.
All is not lost though. There are some providers of specialist party wall insurance, although the market is limited.
What if my contractor cannot finish the work?
The outbreak of coronavirus (Spring 2020) saw building projects halted overnight – contractors were unsure of how to proceed, safety was number one priority. If your building work means you need to rent a property to live in whilst works complete, and the work ceases for an unlimited amount of time, could you afford to continue renting as well as paying your mortgage?
Another scenario is that your contractor simply cannot complete works because they go bust, suffer an injury, or at worst pass away unexpectedly. You are now in the situation that you need to switch contractors mid project causing yet further delays.
If you need to switch contractors you will need to ensure continuity of insurance. If you sack a contractor it is probable that his contractual obligation to insure stops right then and if it takes a while to get a new contractor and restart the site you will need to arrange insurance for the interim period.
Similarly if a contractor ceases trading, you must check whether their insurance is continued or cancelled.
My house will be empty whilst I renovate. Do I still need insurance?
Yes. Insurance for building projects often isn’t about covering the people inside the property, but about the works being undertaken, the expensive equipment and materials being kept at the property, and also the risk of damage to neighbouring properties. While the contractor’s equipment and materials may be covered by his insurance, what about the very expensive kitchen or bathroom fittings you have had delivered to the site? These may need to be insured by you as they may well be excluded from the contractor’s insurance. Check with your insurance broker.
If you will not be living in your property for 30 or 60 days or more, then you should look at additional insurance cover for the work. You will almost certainly need to tell your insurer at the very least, because an empty property has different insurance requirements anyway.
Do I need to inform my insurer that I am doing building work?
For most building work we always recommend you notify your insurers as this will be a change of circumstance. You may not realise it, but even work such as erecting a scaffold to decorate your house results in a notifiable change of circumstance as it may make upper floor windows accessible to intruders, thereby changing the risk an insurer is covering.
In all cases, you should check your policy and speak to your insurance broker or company before you start building and construction works.