Renovation Insurance
By Bea Patel, TLE Property Editor and Director of Shop for an Agent – the estate agent comparison website
An alarming 64 per cent of UK homeowners renovating their property were unaware that not being properly insured when undertaking building work could put them in breach of the terms of their mortgage.
A further 55 per cent didn’t tell their home insurer when doing structural work to their property, resulting in a potential £2.77bn of uninsured property in the UK.
This aspect of insurance is complicated and receiving the right advice from insurers and property professional is vital before starting any major renovation work.
A survey by insurance broker, Insurance Tailors, also found that three quarters of respondents didn’t enter into a formal contract with their builder or contractor. Over a third questioned didn’t check that their builder had the appropriate insurance, and of those who did check, one in five admitted to not knowing what they were looking at.
Andrew Boldt, managing director of Insurance Tailors, comments: “Unfortunately, a lot of people don’t realise that their home could be uninsured if they fail to tell their insurance company that they are undertaking renovations. Most insurers will remove cover completely or reduce cover during renovations, which is insufficient to meet the minimum required by most mortgage contracts, so it’s important that home owners tell their insurer once they’ve decided to renovate.”
There are two elements to the insurance: cover for the existing property and cover for the works that are being undertaken. The builder’s insurance can’t cover the existing building and contents insurance, so if there is a claim, the two insurers, (the homeowner’s and the builder’s), may end up fighting a lengthy battle over who will pay out.
Andrew continues: “It’s also worrying that the majority of recipients didn’t enter into a formal contract with their builder or check that the builder had the appropriate insurance, leaving them exposed should anything go wrong. The builder would not necessarily be liable for any damage, so although it’s rare for things to go wrong, it’s not worth taking a risk with your biggest asset.”
When it came to claiming for damage to a property during renovation works, the survey found that Londoners had the highest percentage of damage claims, and of those who had to make a claim, just over half were rejected. Andrew adds: “There are many reasons for rejected claims; most mass market insurers will automatically reject a claim if structural works were taking place at the time of the incident and they were not made aware. The most common type of claim for those with proper renovation insurance is for faulty workmanship, proving the importance of choosing quality trades people, and checking the contracts that are in place.”
