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How home renovations could affect your insurance

Hannah Bell
Hannah Bell is the development director of our Private Client division at Jelf. Her responsibilities involve exploring and nurturing new opportunities for the national Private Client team as well as supporting and developing its members. Hannah has an in depth knowledge of the insurance needs for high net worth individuals and their families. She and her team use their technical and market knowledge to create crafted solutions for Jelf’s Private Clients.

The last five years has seen a 27% rise in planning applications, and a huge 183% rise in applications for basements.[1] And yet, despite this increase, many homeowners fail to inform their insurance company before starting development.

It has been shown that only 14% of homeowners inform their insurers about home renovations prior to breaking the ground [2] – an oversight that could lead to devastating financial disasters in the case of accident or injury during the project, any damage caused to your property during the development, as well as any rights to compensation should the project not go as planned.  

There are the steps you should take before starting your building work, to ensure your project is legal, financially viable, and completely covered by your home insurance:

Get permission

Depending on the type of work and the conservation status of your property, you may need to get more than one kind of permission or approval before starting development.[3] Even if your home improvement involves something as simple as replacing a window, you should always check if you need building regulations approvalThe only time when you will not need this, is when you are using a contractor registered with a Government officiated competent person scheme.

For bigger projects such as building an extension or developments that make a major structural change to your property, or for possibly quite minor alterations if your property is a listed building, you will need to apply for planning permission. If your property is listed you may also require listed building consent.

Remember, if you are a leaseholder you will need permission from the freeholder before making any changes to your property.

If you do not get the required permission or approval before undertaking work, you may be fined, prosecuted, or even made to restore the property to its original state.

Contractor insurance

When it comes to hiring contractors, it is very important that you are aware of what insurance (if any) your contractors have, and what this insurance covers, including:

  • Public liability insurance - insurance to cover both you and your contractor in the event that someone is hurt or property is damaged.[4]

     

  • Employers' liability insurance - this is a legal requirement, including for contractors working through a company (even if it’s their own). This covers you and the company if employees are hurt on the job.[5]

Taking the word of your contractors that they have the required insurance is not enough. You should always ask to see physical copies of insurance policies and check that these do not expire before the work is expected to be finished.

If a contractor is not covered by the right insurance, you could find yourself liable in the event of accident or damage and may be forced to pay to put things right.

To help you find a trustworthy contractor, there are various aids available including the Government endorsed TrustMark scheme – a quality mark gained through individual on-site inspections, highlighting reputable local traders in the repair, maintenance and improvement sectors.

Your insurance

In the first instances you must tell your insurers before any work commences or they could decline any claims that may arise.

Your insurance policy will detail the limits of acceptable works that they can cover within your existing policy. This could be a contract/project value as low as £25,000 but even lower limits are quite possible.

In many cases, the best approach is to arrange relevant renovation insurance, this will provide cover while work is underway – much like travel insurance protects you while you’re on holiday.

When looking to undertake home improvement projects, you must also consider whether the work will increase the value of your property as this will have an effect on your insurance.

Some examples of home improvements that could affect the cost of your insurance include:

  • Building an extension though one of the most effective ways of adding value to your property, extensions can lead to significant damage if not planned correctly. It is vital that you inform your insurance company about your plans for the property, as well as the insurance you and your chosen contractors have in place.
  • Roof renovations – roof renovations and improvement can actually help to lower you claim rate in the long run – protecting against weather and structural damage. However, some insurance companies don’t cover roof damage in standard insurance plans, so it’s important to double check your policy before starting work
  • Plumbing – water damage is one of the most damaging long-term risks to your property and can be very expensive to correct. It is therefore advisable to alert your insurance company well in advance of having any plumbing work done. [6]

For further information about how your home improvements could affect your insurance cover, contact one of our advisors to discuss you next steps and to ensure you are covered for the entirety of your work.

Sources

1. thetimes.co.uk/article/how-to-insure-a-building-during-a-renovation-project-5t3nlqbsn
2. thetimes.co.uk/article/how-to-insure-a-building-during-a-renovation-project-5t3nlqbsn
3. citizensadvice.org.uk/consumer/getting-home-improvements-done/before-you-get-building-work-done/
4. jelf.com/for-business/public-liability/
5. jelf.com/for-business/employers-liability/
6. haroldbenjamin.com/site/blog/harold-benjamin-blog/can-home-renovation-void-insurance

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