Home renovations: the importance of specialist insurance cover

There has been a significant rise, recently, in the number of people improving their homes through extensions, refurbishments or renovations. However, the vast majority are unaware that a standard home insurance will not provide cover should anything go wrong while the work is being undertaken.

In fact, 86% of property owners do not tell their insurance provider of works being undertaken at their home and risk having their policy voided.

Home insurance does not cover major renovations while they are in progress

Every year a number of homeowners suffer significant losses because their home insurance doesn’t reflect the renovation work that’s being carried out. Homeowners often assume that their standard home insurance will provide cover, but most general home insurance policies exclude damages occurring from works taking place at the home. Even if your insurer does agree to cover renovations, it’s likely that the cover will be heavily restricted and won’t fully protect you from some of the risks that renovation exposes you to.

What about the contractor’s insurance?

Homeowners also often assume that their contractor has the appropriate insurance for the project and that it will pay out should anything go wrong. While most contractors will have some level of insurance cover, it doesn’t necessarily mean that the insurer will cover the cost of any issues.

Do they have adequate public liability cover? Are there any exclusions, such as underground excavations, or limits to their liabilities? Will they have enough to cover a total rebuild of your property in the very worst-case scenario?

Even if they do have the right covers, making a successful claim of negligence against a contractor can be a time-consuming, expensive, and difficult process to prove.

Replace your home insurance with renovation insurance

Renovation insurance is a policy taken out by the homeowner to cover the risks that come with significant building works, for the duration of the project. A comprehensive policy, through specialists, such as Renovation Underwriting, offers the policyholder protection and control over the project, as well as offering the flexibility to extend cover if the project was to overrun.

What else do I need to know about renovation insurance?

One important stipulation of renovation insurance is the need for a Joint Contract Tribunal (JCT) document. They are one of the most common forms of building contracts and can be purchased, off-the-shelf, by anyone wishing to engage with another party to document the building works, an essential part of making sure your project runs smoothly.

You will need to choose the most appropriate JCT for the work, based on the complexity and size of the project.

• JCT Minor Building Works– suitable for projects where the work is relatively straightforward.
• JCT Intermediate– for larger, more complex projects.
• JCT Standard– able to cope with large-scale developments.

Once you have agreed the correct JCT with your contractor you will need to decide where the responsibilities for insurance lie. Within a JCT there are clauses which outline the insurance agreement, which are as follows:

• Clause A. Requires the homeowner to be included as a ‘Joint Name’ with the contractor for the works only. This is most suited to new builds. Some building contractor’s insurance can be extended to include a Joint Name; however, this is often a note of interest only and does not provide the homeowner with any right of control over the policy.
• Clause B. Requires the homeowner to provide a ‘Joint Names’ insurance policy for the new works and the existing structure. Using this clause gives the homeowner control of the insurance and covers both the existing structure and new works under one comprehensive all risks policy. It should create a smoother claims experience dealing with just one insurer.
• Clause C. Requires the works and existing structure to be insured by ‘other means.’ This clause should only be used if there is a good reason to do so. The main reason for using this clause is in cases where the existing structure is not insurable.

The various JCT contracts will have different clauses, so we are happy to look over the contract and help you determine the best option. Generally, clause B gives homeowners the most control over the insurance, an important factor when you consider your home is often your most valuable asset.

Next steps

As soon as you have decided to renovate or undertake significant building works on your property, you should consider your insurance. At Alan Boswell Group we can design your insurance policy to give you maximum protection, help you avoid the pitfalls of the planning process, and make sure you don’t underestimate the cover you will need. If you would like to discuss your renovation project, contact our renovation team on 01603 649738 or [email protected]