Contract works insurance: Dispelling common misconceptions

Did you know that the vast majority of home insurance companies are unwilling to insure homes that are undergoing a building works project or will look to reduce the standard policy coverage whilst these are ongoing? And if you’ve bought your household policy without the support of a broker, it’s highly likely that you will be unaware of any clauses which might leave you exposed during your renovation project.

Because of this it’s important to work with a specialist renovation insurance broker who can make sure that you have the right level of contract works insurance in place, leaving you to get on with making your dream home a reality. As a start we’ve laid out some common misconceptions below:

I don’t need Contract Works insurance as my Contractor has their own insurance

Even if your Contractor has Contractors All Risks (known as C.A.R.), as well as Public and Employers’ Liability insurance, this is simply not the case. Entering into a formal contract to refurbish your home places the onus on you as the property owner (known as the ‘Employer’) to insure your home (existing structure), the materials brought on site and the works in progress, irrespective of what insurance the Contractor may or may not have in place. Additionally, you may not wish to rely on the Contractor’s insurance to respond in the event of a claim, especially when large sums are involved.

Regardless of whether you are required to insure the works under the terms of a contract, or even if no contract is signed, by purchasing insurance for the existing structure and the works, you have peace of mind in knowing you have protected possibly your most valuable asset by arranging the appropriate insurances that would respond in the event of a claim.

I only have Contents insurance, so works to the building are not my concern

If you are the owner or leaseholder of a flat undergoing refurbishment, the freeholder of the building must be informed so that they can notify their respective insurer. Even if you only have Contents cover under your own policy, you will be required to inform your insurer of any works planned, due to the increased risk of loss or damage to the contents. Once the works are completed, the improvements that you made to your flat in terms of wooden flooring and fitted units etc. would not normally be covered by the Buildings insurance (block policy) and would need to be covered separately as Fixtures and Fittings/Tenants Improvements under your Contents policy.

I have a listed property but it’s only a small alteration, so I won’t need Listed Building Consent

If you own a listed property, Listed Building Consent is required to carry out any works to a listed building which will affect its value for listing purposes. This will almost certainly be necessary for any major works, but may also be necessary for minor alterations, change of use of the property, or even repairs and maintenance.

Works such as re-pointing and repairing, installation of doors and windows, and alteration of fireplaces can require Listed Building Consent, even if planning permission is not necessary. Replacement windows and doors are common areas of controversy and subject to strict control. It is always advisable to check with your Council’s Listed Buildings Officer before undertaking any work.

Of course, every project will be different, but it is part of our role as your contract works insurance broker to give advice on not only the insurance of the existing structure, but also the insurance of the proposed works, the type of contract being signed and the adequacy of the Contractor’s insurances.  To enable us to provide the best advice and arrange appropriate insurances, such as renovation insurance, extensions insurance, self build insurance etc, we would ask you to complete a questionnaire summarising the proposed works.

With all there is to consider, it is important to speak to your Account Handler in the event you are considering works, however small you consider the works to be.