Before You Renovate: The Insurance Mistakes That Could Cost You Big

Thinking about a renovation project? Five things you need to know before you start

What’s more stressful – moving home or having a new baby? You might be surprised to hear that research carried out by Compare My Move1 recently discovered that people in the UK find carboard boxes and moving vans more stressful than sleepless nights and dirty nappies.

It’s perhaps no wonder then that, according to Santander, almost a third of UK homeowners considering a move have decided to stay put and renovate their homes rather than enduring the stress and expense of a move.

Renovations can bring their own stress, particularly if things don’t go to plan (do they ever?). If it’s true that assumption is the mother of all failures, then we think it’s worth being a little more informed before you embark on that big project.

When you start thinking about how your newly renovated home might take shape – the day you have friends over to enjoy your new kitchen-diner, spend the evening relaxing on the perfect sofa in your extended lounge or opening the bifold doors to your newly-landscaped garden, do you also consider the things that could go wrong?

Perhaps walls which crack when your builder starts pulling down an old extension, or the opportunist thieves who take advantage of a partially-built structure secured overnight with flimsy plywood.

Do you assume that your home insurance will take care of any loss or damage caused?

Here are some points worth considering before you get stuck into bringing your amazing vision to life.

1. Your home insurance may need extending to cover your renovation project – Depending on the wording of your policy, your home insurance cover might still apply – just not in quite the way you might think. In other words, your existing home could still be covered for fire, theft, floods and so on, even if you’re in the middle of a renovation. The critical nuance is what happens if something happens as a result of the renovation. That’s unlikely to be covered under a normal policy. In any case, you should speak to your broker about your plans, because failing to notify your insurer could invalidate your policy regardless of what it says about renovations.

2. Your builder’s insurance might not provide you with the cover you expect – Any reputable builder will have insurance, but that policy is primarily designed to protect their business rather than your home. The builder should have liability insurance that covers any damage to your home resulting from negligence. However, the nature of building work means that even the most competent and careful builder can be caught out by an old wall that unexpectedly cracks, or a ceiling joist giving way under additional pressure. In those kinds of circumstances the builder wouldn’t necessarily be at fault, so their insurer wouldn’t pay out.

Even if a builder has been negligent, it’s a very hard thing to prove unless it’s extremely obvious. Nor are they likely to freely admit to negligence, since their insurance premiums would be likely to increase, and bad reputations travel. If they do make a successful claim, they would receive the payout and then decide how much to give you.

3. Don’t assume theft is still covered – If your project requires you to move out for a period of time, check whether this is covered under your home insurance. It is unlikely that your home insurance will automatically provide cover for your possessions whilst it’s unoccupied –if builders will be in the house every day.

Talk to your insurance adviser to arrange any additional cover needed.

4. Don’t hope for the best – Unexpected damage during renovation works is surprisingly common. Anything from burst pipes and electrical problems to collapsing chimney stacks and ceilings, and much more besides, can turn your dream project into what feels like a living nightmare.

Higher value homes often have unique or irreplaceable features, and the bill for damage can mount very quickly. It’s always tempting to think that everything will be OK, but it’s not exactly a foolproof strategy. Getting the right insurance cover in place doesn’t just buy you peace of mind, it can help you fix a serious problem before it becomes an absolute disaster.

5. Speak to your home insurance adviser before any works commence – Have a conversation with your insurance adviser and tell them your plans. They should be able help you understand what is, and more importantly, what isn’t covered under your existing home insurance policy.

Depending on your existing policy, you may be able to add an extension to the cover for the renovation – but it may be advisable to arrange specific renovation insurance for the duration of the project.

If your project is very costly, requires specialist skills or activities (e.g. demolition or application of heat), or is likely to take a longer period of time, you should expect to pay a bit more for the insurance cover. In the overall context of a major renovation, having the right insurance in place can turn out to be priceless. Without the correct cover, what can seem like a minor hiccup in your project can result in large and unwanted additional costs – and of course, stress.

For specific insurance advice tailored to your next renovation project, speak to our friendly team.