The majority of insurance policies – such as those for your home or your car – are widely understood and the benefits are readily appreciated.
One exception to this rule might be home renovation insurance. Some property may not fully recognise whether there is a need for renovation insurance. If they do, they might still be unclear about what it actually covers.
So, let’s attempt to set the record straight and discuss some of the things you need to know about this particular type of insurance.
Renovating your home
British property owners seem more than willing to take on the challenge of renovating their home. A story in the Property Reporter on the 16th of March 2020 suggested that as many as eight out of ten would be prepared to undertake a moderate to substantial renovation project on their home.
One thing that might not be immediately apparent to that 80% of homeowners, however, is the additional vulnerability of the property while renovations are in progress. Even relatively moderate renovation can involve structural alterations to the building – and building an extension is almost certain to do so.
Although they may have taken the precaution of arranging regular home insurance when they bought the property, a closer look at the policy is almost certain to reveal that the building insurance is severely curtailed – and may even lapse altogether – if work is undertaken that involves any structural alterations. Loss of damage that may result to the existing structure is simply not covered.
Are you covered or not?
Your first step is to find out whether the planned renovation or building works are likely to compromise your current home insurance. If you are proposing works that involve more than a superficial lick of paint, therefore, you need to ask your insurance provider about the likely impact on your existing policy.
If any structural alteration is involved or there is a risk of damage to the existing structure of your home, your insurer is likely to advise that loss or damage arising from your proposed building works may not be covered.
In that case, you will want to consider renovation insurance – which restores the level of protection your home continues to need during the building works. It is a standalone insurance policy – in other words, it is not related to your existing home insurance – and may stay in place for just as long as the renovation works are in progress. With renovation insurance, you do not need to buy a whole year of cover (unless you need it), as you would with most other types of general insurance.
Unoccupied property under renovation
While the builders are in to renovate your house, you will like as not move out and away from the dust, rubble, and disruption. As far as your regular home insurance provider is concerned, your house then falls into the definition of “unoccupied property” if you have not been sleeping there for 30 to 45 consecutive nights (the exact period may vary from insurer to insurer).
For many homeowners, that may be when the confusion and uncertainty start. Indeed, a note by the Financial Ombudsman Service on the 26th of January 2021 explained that many of the complaints it is asked to investigate concern the insurance of properties that are in the process of refurbishment or renovation.
The confusion and uncertainty arise because of the action taken by the majority of insurers to severely restrict or exclude altogether cover for a property which is being refurbished and renovated while the occupants temporarily move out of the builders’ way. The homeowners might be under the mistaken impression that their regular home insurance continues to protect their property as usual.
As far as the insurer is concerned, however, the property is now doubly vulnerable. Not only might the existing structure of the building be comprised by the building works in progress – resulting in loss or damage to the existing structure – but a building that is unoccupied is further vulnerable to the unwanted attentions of burglars, vandals, squatters, and other intruders.
Even though your builders are at the property throughout the working hours of every day, your insurer nevertheless considers the property to be unoccupied. Because it is unoccupied, normal insurance cover may be severely restricted or regarded as lapsed by your home insurer.
For that reason, you need to ensure that your specialist renovation insurance also incorporates an element of unoccupied property insurance – to restore the full cover which continues to be required for your home – or that you arrange separate unoccupied property insurance for your home.
If you have questions relating to your insurance position while renovating your property, please do not hesitate to contact us – we will be delighted to help!