There are a number of reasons why a homeowner or landlord might want to renovate a property:
- the existing property has become tired and worn, with a need for updating in order to improve the residential experience or to attract suitable tenants;
- the current state of the housing market in the UK makes renovation a more economical – and more certain – proposition than selling up and moving elsewhere;
- buying a previously empty or abandoned property allows a blank canvas on which to create the home you have always wanted or a property to form the cornerstone of a buy to let business.
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 experts and 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.
Do I need home insurance for renovation?
Amidst all the background research, consideration of others’ experiences, drafting plans for your own extension or remodelling your kitchen project, organising architects’ drawings, advice from engineers, lining up potential builders and contractors and lodging your application for planning permission, however, it might be easy to overlook one essential safeguard.
Before you or your builders start any work at all, it is important to ensure that your property is adequately safeguarded by the appropriate type of insurance – you will need to get a quote for specially designed renovation insurance, a product for which we have a particular expertise and experience here at Cover4LetProperty.
Why is renovation insurance important?
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. Typically, if your renovation project involves doing anything to the structure, then you will need property undergoing works insurance.
Your first step is likely to be a call to your current insurance company to set out your renovation proposals and get a quote. If you are planning little more than some diy superficial painting and redecorating, this is unlikely to cause much of a problem.
A renovation insurance quote then becomes necessary because:
- your existing insurance cover probably offers no protection against the risk of damage to the existing building whilst the extensions 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 insurance;
- 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 insurance component of renovation insurance indemnifies you against such potentially expensive claim (up to set limits).
The contractor’s liability insurance typically doesn’t cover any claims against you
Although the contractors working on your renovation works are likely to have arranged insurance cover for their own public liability, this does not extend to any incident for which you as the property owner may be held liable. Only specially designed renovation insurance is likely to afford you this protection.
Materials, supplies and machinery
In addition to public liability cover and safeguarding the existing structure of your property are other risks associated with the renovation works in progress. On site, for example, you may have valuable materials, supplies, plant, machinery and tools which are at risk of being stolen or vandalised. Renovation insurance may protect you against such risks.
What about exclusions?
A renovation insurance policy typically excludes damage caused by the contractor (which should be covered under the contractor’s own insurance).
Usually, where structural works are taking place no cover is in force for any part of the building that is either being constructed or worked upon.
Short-term unoccupied property insurance for properties undergoing works
There is a further important and potentially contentious area in which extensions and renovation insurance may leave no room for doubt – and that is cover for those risks when the property is unoccupied during your renovation project.
Confusion has arisen since most insurers consider the property to be unoccupied when no one has been living and sleeping there for longer than 30 to 60 consecutive days (the precise interval varying from one insurance policy 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 insurer’s policy.
The limitations or removal of cover happens because insurance company considers 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.
Why does this matter?
The exact status of your empty property might prove to be critically important to the continuity of your property insurance cover.
To explain – the insurance industry typically uses very different definitions to think about the occupancy status of an empty or unoccupied property:
- normal status. This means the property (whether owner-occupied or let) is occupied according to standard insurance definitions. Typically, that will include situations where the tenants might be on holiday or the property unoccupied during periods where you’re changing tenants;
- unoccupied status. This is typically taken to mean situations such as those above or any other, that result in a property being unoccupied for longer than the specified consecutive days. Once that threshold is passed, any standard property insurance might be at risk and typically, specific unoccupied property insurance will be required to ensure continuity of cover;
- empty/uninhabitable status. Not all insurance providers necessarily consider this to be a separate category but some do. It essentially describes those properties that are perhaps in very poor condition or which are undergoing major renovation and which cannot be occupied.
Insurers make these distinctions because they might typically outline very different risk profile scenarios for the properties concerned.
For example, it is widely known that unoccupied properties may be at much higher risk of burglary and vandalism that those which are occupied. Conversely, an unoccupied and perhaps gutted building under renovation might be at a very low risk of burglary but a much higher risk of vandalism and squatting.
Insurers need to be clear that they are providing the most appropriate form of cover for the risk profiles concerned, perhaps including products such as short term unoccupied property insurance, in order to protect the interests of the policyholder as well as their own.
What is the status of your property?
If you have any doubts about whether you might need short term unoccupied property insurance or any related products, it would be advisable to discuss your situation with an experienced property insurance provider such as ourselves at Cover4LetProperty.
Renovation projects – and building works in general – have a tendency to overrun their scheduled completion dates. When arranging your renovation insurance, therefore, you might want to choose a policy that offers sufficient flexibility for extending the cover it offers to meet any extended completion dates. Our unoccupied property options offer flexible options.
The specialist, niche cover provided by renovation insurance, therefore, may provide the solution for ensuring that work in progress, the supplies, materials and tools likely to be on site, and the potentially substantial claims arising from your public liability are all suitably protected.
Finally, of course, you may want to ensure that the completed renovation works – and any structural changes in particular – are also adequately protected by an appropriate form of insurance, updating where necessary your existing home or landlord insurance cover.
Further reading: Guide to renovating.