If you are considering renovating a property, one of the costs that you will need to factor in is the cost of renovations insurance. But what exactly is it, and why is it important to have? Secured Loans takes a further look and explains when you need it.
Do I need renovations insurance?
You will need to get site insurance (or empty buildings insurance) if you are not intending to move immediately into the property so that you are covered for public liability and potential damage. This is because if you only have a standard buildings insurance policy and the buildings remains vacant for over 30 days (or if it is not possible to live in the property due to not being habitable) then you will find that the policy is invalid, meaning that if you needed to make a claim at a later date, you will not receive money from the policy you have paid into.
Depending on the insurance provider, it may be possible to extend empty buildings cover if you inform them, however, it may be the case that they will only be willing to cover insurance for basic risks (for example, for things such as impact by aircraft, explosion or an earthquake).
Generally speaking, regular inspections will need to be made (typically this will be every two weeks) to keep empty buildings cover policy valid. Insurers will also need:
- The mains to be isolated (and if applicable this also applies to mains gas and electricity)
- The water system should also be drained down
- Waste must be cleared
- The letterbox should also be sealed
- Depending on the policy, it may also be a requirement to have security shutters fitted in the property
Site insurance cover
If you are carrying out renovations, you should make sure that you take out site insurance cover for the entirety of the project as soon as you have bought the property, (or alternatively, if it is your existing home, you should purchase coverage when you have moved out). But what exactly does site insurance cover? Whilst this list isn’t exhaustive, a typical policy will cover:
- Employer’s liability: if you are hiring someone to carry out renovations (this does not include family members) it is a legal obligation to have employer’s liablity insurance in place. This means that if a worker was injured you would be covered for the cost of medical bills and compensation
- Personal accident: site insurance cover will provide a temporary manager in the event that you are injured whilst being the project manager of renovations
- New works: this includes the existing structure, temporary works throughout the renovation as well as materials used
- Legal expenses: in the event that there is a dispute
The cost of purchasing site insurance cover will be dependent on a number of factors, such as:
- The value of the building works that you are carrying out
- The property’s rebuild value
- The location of the property (based on the level of risk according to the local area’s claim records)
Is it necessary to inform your insurer if you live in the property whilst carrying out renovations?
This will depend on the sort of renovations you are undertaking. For example, if renovations is only a matter of adding a new kitchen or bathroom, or perhaps a bit of decorating it will not be necessary for you to tell your insurance provider about it, but it may be worth increasing the level of cover you currently have if the rebuild costs go up.
If you intend to do an extension or a large-scale renovation work that may lead to a higher level of risk to the building or contents then you will need to let your insurer know. This is because the large majority of home insurance policies will not include renovation as part of their policy. if you do not inform your insurer, it could lead to the entire policy being cancelled.
It is important to note that whilst some insurers will extend cover, you should check the terms and conditions thoroughly as a number of policies will exclude certain risks when it comes to renovations (these include things such as a collapse between an extension and the existing property, for example). As a result, you should make sure that such things are included in your all-risk insurance cover or get another policy.
After the work has been finished, don’t forget to increase your buildings cover in line with the new rebuild cost.
What about specialist insurance for a conversion project?
Are you intending to convert an office, church, barn or an empty dwelling (that has been vacant for at least 10 years)? In this scenario, you will need to take out empty buildings insurance once contracts have been exchanged.
By getting specialist insurance, it means that you will be covered as soon as work is undertaken, covering you for new works as well as the existing building. To make sure that you are fully covered, you should also look at taking out a guarantee.
What about if you are not using a main contractor?
Unsure if you need to take out specialist insurance if you are not using a main contractor? You will need to take out your own cover in the event that you have decided to use a builder for only some of the renovation works, subcontracted labour or DIY. The kind of policy covers you should be looking at for renovations, extensions and home improvements should include the following:
- Legal expenses cover
- Public liability insurance
- Contract works (this should include things such as tools, temporary buildings and materials)
- Personal accident cover
- Employer’s liability insurance