Do I need renovation insurance?

Posted: 18th Apr 2017

Are you looking to convert your present home into a dream residence? Perhaps you are looking to buy a cheap property, renovate it, and sell it for a profit. The eventual use of the property, after its renovation may be for you and your family’s use, you might want to let it, or you might decide to sell.

Renovating any property is likely to be a major undertaking – and one you are not going to take lightly. You have your own ideas about what you want to achieve, but you are also likely to need the input of professionals such as architects, engineers and surveyors, not to mention gaining that all-important planning permission.

Casting around for help and advice, you might try the online resources offered by Renovate Me – where posts are illustrated by a number of case studies – or the extensive background research which you may find on the website Homebuilding and Renovating.

Renovation insurance

Amidst all the background research, consideration of others’ experiences, drafting plans for your own extension or remodelling project, organising architects’ drawings, advice from engineers, lining up potential building contractors and lodging your application for planning permission, however, it might be easy to overlook one essential safeguard.

Before you or your builder starts any work at all, it is important to ensure that your property is adequately safeguarded by the appropriate type of insurance – specially designed renovation insurance, a product for which we have a particular expertise and experience here at Cover4LetProperty.

Do I need renovation insurance?

You might already have home insurance – or landlord insurance if it is a buy to let property – so it is reasonable to ask whether you need a quite separate type of standalone cover in the shape of renovation insurance.

Your first step is likely to be a call to your current insurer to set out your renovation proposals. If you are planning little more than some superficial painting and redecorating, this is unlikely to cause much of a problem.

However, most forms of building insurance (for home owners and for landlords) specifically excludes the continuation of cover if an extension is being built, other structural works are planned, or you have a major building project in mind.

Renovation insurance then becomes necessary because:

  • your existing insurance cover probably offers no protection against the risk of damage to the existing property whilst the works are in progress and is even less likely to cover the new building works;
  • renovation insurance is also necessary to safeguard plant, equipment, tools and materials used in the building works or being stored on-site; and
  • renovation insurance is also designed to make sure that you have sufficient public liability cover;
  • as the property owner of a building undergoing renovations, you continue to owe a duty of care to any visitor to the site (even those illegal intruders to whom you have given no authorisation), neighbours and members of the general public;
  • if any one of these individuals suffers an injury or has their own property damaged as a result of the building works, you may be held liable and ordered to pay a substantial sum in compensation;
  • the public liability component of renovation insurance indemnifies you against such potentially expensive claims.

Unoccupied property insurance

There is a further important and potentially contentious area in which renovation insurance may leave no room for doubt – and that is cover for those risks when the property is unoccupied.

In the past, complaints have been raised by the Financial Ombudsman Service about the extent to which properties in the course of renovation may be said to be unoccupied – even when someone is working there every day, but no one is able to sleep in the building.

Confusion has arisen since most insurers consider the property to be unoccupied is no one has been living and sleeping there for longer than 30 to 60 consecutive days (the precise interval varying from one insurer to another).

Whilst your building works are in progress, of course, it is unlikely that the property remains habitable and, so, your standard home insurance or landlord insurance is likely to become severely limited in scope or may lapse altogether as a result of your current insurers policies.

The limitations or removal of cover happens because insurers consider the risks to an unoccupied property to be quantitively and qualitatively different than when the flat or house is in continuous occupation.

With your existing insurance severely limited, therefore, unoccupied property cover needs to be incorporated into a replacement renovation insurance policy.

Standalone renovation insurance provides a way of tailoring the protection you need for any tools, plant, machinery or materials stored on the site, together with cover for the risk of loss or damage to the existing structure caused by the building works and the new works themselves.

Further reading: Guide to renovating.