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What is renovation insurance?

The renovation of an empty property – either one you already own or one which you intend to buy for that purpose – may serve two purposes:

  • it contributes to the overall standard and quality of the country’s housing stock – an important consideration given the current pressures on the supply of decent housing; and
  • it increases the value of your investment in the property – whether you intend to live there as an owner-occupier or subsequently letting it to tenants.

Indeed, local authorities are generally so keen to see empty properties returned to the housing stock at an improved standard that they may offer grants, loans, and plenty of advice to encourage property owners to those ends. An overview of such schemes was published on the 3rd of November 2021 by the Gants Expert.

As the guide points out, councils may impose conditions on the subsequent resale of such a property or conditions about it being let to tenants.

Renovating a property

Whether it is your own home or a buy to let property, any renovation project is a serious matter, not least because of the expense and disruption. How often have you heard the complaint that it cost twice as much as you bargained for by the time the building works are complete?

And if it is a let property you are looking to renovate, it is not just the cost of the building works themselves, but also the rental income that is lost whilst tenants cannot be living there.

Planning permission and building regulations

When you engage in anything likely to be so extensive, time-consuming, and expensive as renovating an empty property, careful planning of every aspect of the work is clearly important.

High on your list of priorities may be the need to establish whether the renovations require planning permission and, if they do, that you make an early application for the necessary planning permission. Since your application may take some time to process, the sooner you are able to submit it, the sooner might the work actually start.

Starting the work without planning permission or failing to comply with the relevant building regulations may ultimately prove very expensive – if you are subsequently required to tear down and rebuild any part of the works.

Another critical element of preparation is insurance for the property during its renovation:

  • inform your current home insurer or landlord insurance provider of your plans;
  • if these involve relatively minor renovation and redecoration works, the fact that you have informed the insurer may simply be enough;
  • on the other hand, your insurer may want to impose additional conditions or charge an additional premium for cover for the duration of the works;
  • alternatively – and especially if the property may not be occupied during the building works – your insurer may impose conditions you consider unacceptable or even remove cover altogether;
  • in that event, of course, you are almost certain to consider purpose-designed renovation insurance.

If you have bought a property to let or to eventually use as your own home with the specific objective of renovating it first, you may find it difficult even to secure renovation insurance.

Therefore, you might want to turn straight away to a specialist provider capable of providing this type of cover from inception – from the time you buy the property even though you have not lived in it yet or let it to your first tenants.

Why do I need specialist renovation insurance?

In response to that question, let’s take a look at your current home or landlord insurance.

Whether you own your own home or are the landlord of buy to let property, any insurer needs to know the use to which the insured property is put and any structural changes, modifications or extension that are built.

As the British Insurance Brokers’ Association BIBA) explains, these are “material facts”, which need to be declared to your insurer and your failure to do so may invalidate your home or landlord insurance.

Anything other than a simple redecoration of your property but one that involves building an extension or remodelling or refurbishment, therefore, must be declared to your insurer.

Specialist renovation insurance becomes necessary, therefore, because your existing home or landlord insurance is unlikely to provide the cover the property continues to need during renovation works.

Arranging the appropriate renovation insurance also helps you comply with one of the conditions almost certain to be attached to any mortgage you have on the property. This is the requirement to maintain adequate building insurance at all times – an almost universal condition, which is noted in guidance offered by Citizens’ Advice.

If your regular property insurance becomes restricted or lapses because of the building works in progress, therefore, renovation insurance continues to ensure that you are complying with the mortgage conditions.

If you are the landlord of let property, your hand may have been forced into commissioning some degree of renovation in order to meet local licensing requirements which may have been introduced in your area – especially if the property is a House in Multiple Occupation (HMO). The housing charity Shelter has published a guide to the different types of HMO licence and their conditions.

Renovation insurance is standalone cover but designed to provide temporary protection while building works are in progress. Once the latter are completed, you revert to your normal home or landlord insurance – reviewing the total building sum insured to reflect the increased value of your renovated property.

Because it is temporary cover, therefore, a distinctive feature of renovation insurance may be the ability to purchase it for periods of less than the full 12 months normally required for other forms of general insurance. If the works are scheduled to last just three or six months, renovation insurance may be tailored to cover just this period – yet also remains sufficiently flexible to be extended if unexpected delays or hold-ups occur.

A detailed guide to renovating and what renovation insurance you may need is found in the library of different property guides we have published here at Cover4LetProperty.

What does renovation insurance cover?

Although different policies may vary quite widely in the details, the following are some of the principal elements typically covered:

Building insurance

  • you need to restore the protection of the existing building against the usual major risks, which are likely to be that much greater whilst the works are in progress – whether because of the added risk of flood damage, for example, if the existing building is no longer wind and watertight or because of any structural damage caused during the work in progress;
  • in addition to the existing structure, some renovation insurance policies may also provide protection against loss, damage, or the need for reinstatement of the new works;

Contents insurance

  • the contents of your existing home or let property are also under greater threat during any renovation works – especially since the premises are likely to be unoccupied and for there to be no one onsite for significant periods of time, especially at night;
  • renovation insurance may restore the protection you need for the property’s contents;

Public liability insurance

  • building works on your property may pose a risk of injury or property damage to passers-by, visitors to the site, neighbours, and other members of the public;
  • if one of these third parties suffers a loss or injury, you may be sued as the property owner – and claims may be substantial;
  • public liability insurance provides indemnity against such claims – typically for at least £1 or £2 million;
  • bear in mind that your contractor’s own 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;
  • In addition to public liability cover and safeguarding the existing structure of your property, there are other risks associated with the renovation works in progress – onsite, for example, you may have valuable materials, supplies, plant, machinery, and tools which are at risk of being stolen or vandalised.

Unoccupied property cover

One further important aspect of renovation insurance is its role in providing cover when your property is unoccupied for longer than a month or so – something that is almost certain to occur if extensive building works are being carried out and you need to vacate the home or temporarily vacate it of any tenants.

Even though there may be people working on the property throughout the day, there are significant periods of time when the property is empty – and these are times when it is likely to be at its most vulnerable.

When no one is living there, the need for minor repairs may go unnoticed and rapidly develop into major emergencies, whilst an empty building is especially vulnerable to squatters, vandals, arsonists and other intruders.

As a result of the heightened risks, most home and landlord insurance policies severely restrict the scope of cover, or regard it as lapsed entirely, once the property has been empty for longer than 45 to 60 consecutive days (the exact period varying from one insurer to another). Once again, renovation insurance plugs this gap by incorporating a valuable element of unoccupied property insurance.

Typical exclusions?

The exclusions incorporated into any insurance policy are every bit as important as those risks and perils that are covered.

Although each policy will vary in the details, renovation insurance 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 (the works in progress, to which we have also referred to above).

The typical renovation insurance term

Whenever the builders are in, you are likely to have a carefully planned schedule of works that include a completion date. Delays in even the best-laid plans occur and building works are notoriously prone to unexpected delays.

To make sure that adequate protection remains in place however long the delay in completion, therefore, renovation insurance is typically flexible enough to allow extensions to the period of cover provided.

Since many such building projects are likely to be completed well within the full year, moreover, as we mentioned before, renovation insurance is also designed to offer the necessary short-term cover, which may be bought for periods of just three or six months, for instance, rather than the full 12 months customarily required for most other types of general insurance.

Next steps

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 onsite, and the potentially substantial claims arising from your public liability are all suitably protected.

In short, if you are planning any renovation project for your home or let property, you might want to give careful thought to the need for renovation insurance. So, if you are about to embark on an exciting new renovation project for your property, just give us a call or get an online quote for renovation insurance today.

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