If you’re thinking about extending or renovating your property you’ve probably spent the last few months designing, planning, and financing the works for your dream home improvements. But with the actual build date fast approaching, have you given any thought to what insurance you might need whilst the work is carried out?
A common misconception of most homeowners is that their home insurance policy will cover any renovation projects. Whilst this may be true for low value works (but not always so please check with your insurer), projects exceeding £50,000, up to any value, require a little more attention.
Renovation Insurance, otherwise known as a Homeowners Contracts Works policy, is a specialist policy that protects the works in progress during an extension or renovation project. Not only does it protect the specified works, it also covers the existing structure, materials yet to be fitted, liabilities and plant/tools.
This type of policy can also be extended to include unintentional damage to neighbouring properties and potential threats including fire, flood, storm, accidental/malicious damage and theft.
Why should I consider Homeowners Contract Works Insurance?
Knowing the basics of contract works and renovation insurance can truly help you appreciate your exposure before it’s too late. This type of cover puts you in control and enables you to communicate any conditions that must be complied with to the contractor.
What are the main benefits?
- One insurance policy for the home and building works
- The existing structure is insured against loss and damage
- The building works are covered if they are damaged, for example, by a water leak or fire
- Property Owners’ Liability cover during the construction period e.g. a roof tile falls and hits a passer by
- Materials you supply to the contractor are insured in transit to and from your home
My builder has insurance. Won’t that cover the project?
In our experience, most homeowners are led to believe their contractors own Contractors All Risks Insurance protects everything, but this is simply not the case. The contractor’s insurance policy will cover all aspects of the works but does not cover damage to the existing structure. In the event of a claim, the contractor’s insurer could refuse to pay on the grounds of their policy wording and expect the homeowner to prove negligence which is almost impossible to do!
What if the works overrun?
One common issue when arranging Contract Works Insurance is the contract overrunning. Keeping your broker up to date is very important. An existing works insurance policy can easily be extended with the addition of a pro-rata premium.
Are there any exclusions my clients should be aware of?
The products are very flexible, insurance can easily cater for the property for all eventualities including the client continuing to live at the property, living on site or even the building being unoccupied throughout the works. In addition, an experienced broker, like ourselves, will talk you through the entire process, highlight any discrepancies and will be on hand in the event of any problems.
What is JCT Insurance?
JCT Insurance is a type of Homeowners’ Contract Works policy that helps specify how the project should be insured and puts the homeowner in charge of the insurance. Whilst that may sound daunting, it is recommended above relying on the contractors’ own insurance.
There are a number of clauses that can be worked into a JCT contract:
JCT Minor Works Contract
5.4 a – Insurance of the works for all risks by contractor in joint names
5.4 b – Insurance of existing structures for specified perils and the works for all risks by employer (homeowner) in joint names
5.4 c – Insurance of existing structures for specified perils by employer (homeowner) in own name
JCT Intermediate Works Contract
6.7 Option A – All risks insurance of the works, in joint names, by the contractor
6.7 Option B – All risks insurance of the works, in joint names, by the employer (homeowner)
6.7 Option C – Insurance in joint names by the employer (homeowner) of the existing structures for specified perils and works for all risks