The tricky part is getting the right sort of insurance. Many people carrying out a Self-build or renovation project believe that their builders and contractor will have insurance to cover the project or that a home insurance policy will cover a property that is undergoing a renovation. This simply isn’t the case says “Home Building magazine experts”.
Don’t just think that any old insurance company can give you cover either – they really can’t and in most cases haven’t got a clue what you really need anyway. In reality there are only a handful of suppliers able to provide you with the advice you actually need and the product that you are looking for.
So let’s clear up some myths.
“My Contractor has Public Liability insurance, so I’m covered” – No you’re not. Public Liability covers the contractor or tradesmen against his liability to you for a negligent act error or omission and you have to prove their negligence. What it doesn’t cover is your property that is damaged by accident, a fire, flood, storm, etc or any of your property that is stolen from your site. You will have no cover if you cause an injury to someone or damage a neighbour’s property.
“My contractor has Contractors All Risks Cover, so I’m covered” – Possibly. So long as the contractor has a valid ‘Contractors All Risks’ insurance policy, with a limit that meets or exceeds the full rebuilding cost of the project, there is a written contract between both parties stating that they are responsible for the whole project to the point of handing you the keys to a completed property, you should be OK. However, if that contractor is building the shell and you are taking over from there, you will have no cover when they have left the site.
Conversions, Renovation or Extension all involve an element of Existing Structure that needs to be correctly insured. For example the house that’s being extended, the barn prior to conversion works and so on. It’s really important that the existing bit gets correctly insured and this is especially true where an extension or remodelling project is concerned. The misconception is that your home insurance covers the extension works during the course of construction – in fact most home policies exclude alteration and renovation as standard. If you advise your home insurer they may offer you some cover but only on a named perils Fire, Lightning, storm etc. basis so a collapse while knocking through won’t be covered.
A Site Insurance policy is a specialist insurance product otherwise known as a Contractors All Risks Policy – it’s designed to cover projects like yours. By the very nature of the projects you are carrying out they are quite complex and so don’t read like Home & Contents policies. They normally cover All Risks of Physical Loss or Damage, which means literally All Risks and is considerably better than just Fire, Flood Storm etc which is called a named perils policy. A Site Insurance policy can usually be extended to include existing structures on an All Risks basis.
A 10 Year Structural Warranty is a policy that covers a house against defects in the design process, materials used or the actual workmanship itself causing major damage along with defective underground drainage and defective weatherproofing. It runs for 10 years from the point you receive your Completion Certificate and enables a prospective purchaser to obtain a mortgage on the property in the event you sell it on.
For example:- If your home is flooded in a storm – then your home insurance pays for it, but if that flooding is deemed to be caused by the roof collapsing because it was not correctly braced when built that is classed as defective workmanship and would be excluded by the home insurer. They would simply suggest you sue the builder, which in raw terms is you. This is why structural warranty is so important on self-build properties.
The warranty provider checks the design of the build and the construction using a series of Technical Audits to make sure there is no defective workmanship, or materials. Defects identified along the way have to be remedied prior to issuing cover.
A warranty provider can often facilitate the handling of the Building Regulation plan check and site inspections by an approved inspector so you don’t have to use the Local Authority. You can normally save money following this route because if you do decide to use the local authority, the warranty provider still has to do warranty inspections alongside the local authority so you effectively get charged twice for the same thing!
Arrange the warranty early on! Basically, the premiums escalate the further through the project you leave it.
It’s possible to cover completed properties on a structural warranty retrospectively
which can be useful if you didn’t get a warranty in place at the start of the build as it enables a prospective purchaser to raise a mortgage on the property. A completed warranty is an expensive option when compared to purchasing it at the start of your project.
Understanding Your Obligations and avoiding being targeted
OK – so let’s get back to the reasons why you purchase site insurance and structural warrantys and consider some important factors regarding claims.
It’s important you read your schedule documents and the policy, to make sure the details are correct and you know what your obligations are. Check whether there are any endorsement or warranties and make sure that you understand the implications and comply with them.
You will need to keep receipts for everything. Site insurance policies are not ‘new for old’, so unless you can prove it was recently purchased the settlement will be reduced for wear and tear.
If you have a flood or a break in etc, take photographs and act as if you were uninsured, make sure the police are informed if it’s a theft. For example:- If you have a flood, hire a pump and a dehumidifier – the additional costs will be recoverable as part of the claim.
Make any claim promptly – if you prejudice the insurer’s position they may refuse all or part of the claim.
Prevention is better than cure so avoid being targeted by criminals. This always sounds like a copout but the simple fact is, a claim will be a huge interruption to your project so if you can avoid one in the first place you will be better off. Don’t underestimate the criminal mind, for example the fact that your roof tiles are now in position on the roof won’t always stop a criminal stripping them overnight!
In the vast majority of theft claims dealt with, stuff delivered to site is miraculously stolen very shortly after being delivered. Research has shown that the reason for this is unscrupulous individuals who basically see something quite tempting delivered and then tip off a criminal in exchange for cash.
To combat this, just make sure a written record is kept of people delivering, visiting and working on site and check for personal ID each time someone new arrives. By writing their name down in a book, you can be sure they will think twice about blabbing down the local pub especially as you know exactly who they are!
Don’t store delivered materials in full sight, if your kitchen is being delivered, store it upstairs out of sight.
Plant tools and equipment are expensive items to hire so if you no longer need it Off hire it ASAP.
It’s all common sense really. If you need more information, request a fact sheet from Self-Build Zone.