We are doing an extension and total renovation on our house, which will involve gutting it and doing building and roof work.
We will have to move out for six months while this is happening. What do we need to do about our buildings insurance?
I understand we need to tell the insurer, but will the buildings insurance still cover us during this time and are we likely to have to pay a big extra premium?
How do you insure your home when doing a major renovation? Or should we just rely on the builder’s liability insurance?
Over our heads: The ins and outs of insurance for refurbishing a property has got one reader wondering what their options are
Sam Barker at This is Money replies: Our reader is taking the plunge and wants to commission major upgrade work to their long-term home – but this thrusts them into a world of non-standard insurance.
What is the best way to get the peace of mind that their most expensive asset remains safe and insured?
There are a few points to tackle here. Does the homeowner’s current buildings insurance cover them for the planned work, can it be extended to do so, or do they need completely new cover?
Also, can they rely on the builder’s insurance or not?
Although our reader’s query focuses on buildings insurance, there is also a contents insurance issue as the property will have possessions in it.
This is Money spoke to a specialist to find out what our reader needs to do to be safe before major building work.
Andrew Gibbons, managing director of insurance broker Mason Owen, said: ‘In terms of an extension a and total renovation, the first red flag would be if this is a standard household insurance product. The chances are a member of the public has been online and bought a basic household insurance deal.
‘It is highly unlikely insurers on standard products would want to get involved with a renovation of this extent, especially if the house will be left empty for a period. So when this person makes a disclosure, they shouldn’t be surprised if their insurer says that they won’t be covered during the renovations.
‘If an insurer does say yes they could restrict cover and quite likely charge an additional premium. The property will be left empty, it could be open to the elements, and there is a higher risk of fire with people working on it.
‘As projects get bigger people use something called a “standard form of building contract”. That determines who is meant to insure what – the homeowner or the builder. But at the lower end, projects don’t have that.
Sam Barker of This is Money adds: The homeowner is well advised to contact their existing insurer or broker and ask if their existing home insurance policy covers, or can be extended to cover, the work being done on the house.
If not, they should take out a specialist type of insurance called ‘buildings in course of alteration insurance’ or sometimes ‘extension’ or ‘renovation’ insurance.
The homeowner should also enquire with their old insurer about cancelling their home insurance for the period of the refurbishment and getting a refund.
When it comes to the builder’s liability insurance, Gibbons points out that this may not be as useful as the customer imagines.
The builder has – or should have – employers liability and public liability insurance.
But the former only covers the builder’s staff, while the latter does not protect the homeowner either.
‘The subject of the building work is the building, and that is not covered by public liability,’ Gibbons said.
‘Public liability will cover the liability of the builder in managing the contract site while it is under their control, rather than paying for damage to the property as it is being worked on. The customer would also have to prove negligence, which can be difficult in a building scenario. Normally, insuring the existing structure is the responsibility of the property owner.’
Instead, the homeowner can ask their builder if they have insurance called ‘contractors all risks’. That covers all the contracted work and the materials used for the refurbishment.
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