Insuring building works on your high value home

Your home is precious, so naturally you need to insure it properly. Add in some building works and insurance becomes more complex. To help guide you when it comes to insuring contract works, we’ve put together some guidelines - but every situation is different, so if you’re unsure contact our specialist private client team.

If you’re planning works, here are the key insurance considerations to keep in mind.

1. The existing structure and works in progress.

You need to consider the insurance of the existing structure as it stands on day one of the works and the value of the works in progress. If your home suffers a claim two days before the end of the project, you could be faced with a bill for almost 100% of the contract value. For example, if your home is damaged or destroyed during the works (e.g. by fire or flood), you could lose:

• The original structure (your home as it was before works started)
• Everything that’s been built or installed so far

This won’t be covered by a standard home policy, even if it does cover the existing structure, which many won’t agree to, once you disclose the works.

2. The contract you are signing with the builder.

This often has an insurance clause which states who should be insuring what. You need to ensure you comply with this so that you’re not in breach of contract. Some contracts require you to insure the works in “joint names” with the builder. Joint names insurance is a type of insurance policy where both the homeowner and the contractor (builder) are named as insured parties on the same policy. However, this can increase the cost of your works and it’s not accepted by most UK home insurers.

3. Your current home insurance policy.

This will stipulate the maximum acceptable contract value or what types of works are acceptable to them, often non-structural. However just because your home insurer hasn’t cancelled your policy it doesn’t mean that they are insuring the value of the works or giving full cover to your home during the works. Your insurer may also have additional clauses written into your policy wording. Finally, what happens if you breach your policy’s works limit - even though you weren’t planning to?

4. Your builder’s insurance policy.

Your builder should have Public Liability Insurance, but having this doesn’t mean that your home is fully protected. It means that if the builder is negligent and has damaged your property, the builder’s policy may pay out. But this policy is not in your name, you may have to prove negligence (this can be difficult to do) and you have no control of the claim.

5. Liability Insurance.

Depending on your level of involvement you may need Employer’s Liability Insurance and Project Public Liability Insurance. If your project is managed by a main contractor, you’ll likely only require Property Owner’s Liability.

6. Occupancy.

Your existing home insurer may decline to continue cover if the home is to be unoccupied during the works - even if the value of the works is below their works limit.

7. Non negligent liability.

This type of insurance protects you (the homeowner) if your building works accidentally cause damage to neighbouring properties, even if no one is at fault. During renovations, especially basement digs, underpinning, or structural work, your neighbours’ homes could be affected (e.g. cracks, subsidence). Even if no negligence is proven you may still be legally responsible under the Party Wall Act.

How Howden can help

Building works insurance is fraught with potential pitfalls, particularly for larger or non-standard homes. A single, specialist works policy is often what’s required to cover the existing structure, the works in progress, your Public and Employer’s Liability. Our recommendation is that you speak to an expert during the planning phase of your project.

If you’re planning a home renovation, then call our Private Client team on 020 8256 4901