A Guide to Renovation Insurance 2023

Renovating or extending your home is an exciting project but comes with risks. Your existing home insurance policy may not provide adequate cover during building works, exposing you. That’s where specialist renovation insurance comes in. This guide explains what renovation insurance is, what it covers, why you need it and how to find the best policy for your project.

What is Renovation Insurance?

Renovation insurance, or building works insurance, is a temporary policy designed to protect homeowners undertaking renovation projects. It provides cover for the existing structure of your home, your contents, liability risks and the works themselves while construction is ongoing.

Standard home insurance usually excludes or restricts coverage during building works. For example, claims for subsidence, collapse, theft, damage, and more could be refused if you don’t have the right policy. Renovation insurance fills these gaps to protect you and your property.

Policies are available for all kinds of home improvements, including:

• Extensions – Adding a conservatory, loft conversion, garage etc.
• Structural work – Knocking down walls, underpinning, damp proofing.
• Roofing – Retiling, thatching, chimney work.
• Rewiring – Upgrading electrics, plumbing and heating systems.
• Kitchen/bathroom renovations.
• Any large construction project.

Cover lasts for the works until your home is restored to a habitable condition. It can be arranged on a short-term basis for smaller jobs or longer term for significant renovations spanning several months.

Why Do You Need Renovation Insurance?

There are several key reasons why specialist renovation cover is essential:

Your Existing Policy May Not Cover Building Works

Standard home insurance is designed for finished properties, not homes undergoing construction. As soon as you start pulling down walls, digging foundations or stripping roofs, your normal policy becomes ineffective.

Most insurers will not cover damage caused by or to tradesmen, their tools and materials. Anything arising from the building works themselves, like fire, flood, theft or subsidence, may also be excluded. Failure to disclose works could even invalidate your entire policy.

With renovation cover, you get protection designed for the unique risks construction projects bring.

It Covers Liability Risks

You or your builders could be deemed legally responsible for injury to workers or visitors during the project. Standard policies may not cover liability arising directly from the works.

Renovation insurance protects explicitly against personal injury and third-party property damage claims. This gives you peace of mind if the worst happens.

It Covers Your Contents & Building

Your existing home and possessions will be vulnerable during significant work. With walls removed and roofing stripped, the structure of your property is exposed, and your contents are easier to steal.

Dedicated renovation cover protects the existing buildings and contents while improvements are ongoing. It also covers temporary storage or alternative accommodation if needed.

It Covers Contract Works

This protects the new works – the property improvements you’re paying for. It covers materials, fixtures and fittings against damage while on-site during construction, including theft and weather damage.

Some home insurers may offer limited contract works coverage. However specialist policies provide higher limits and fuller protection against all risks. This covers your investment in full until the project is signed off.

It Satisfies Your Mortgage Lender

If you’re borrowing money for the project, your mortgage provider will require you to take out suitable renovation insurance. This is to protect their security interest in your property.

Specialist policy wordings designed for lenders will satisfy their requirements. Your insurer can also confirm the cover details in writing.

It Gives You Peace of Mind

Knowing your major investment is protected provides reassurance. No matter what mishaps occur during the works, you can have confidence that any damage, liability claims or other issues will be dealt with.

Having the right insurance avoids disputes with builders over who pays for any problems. It also means you don’t need to make stressful damage-limits decisions if things go wrong.

What Does Renovation Insurance Cover?

Renovation insurance packages typically include the following core covers:

Existing Structure Cover

This protects the existing buildings against loss or damage during works. It covers your main domestic property and any outbuildings included under your standard home insurance.

Risks covered align with your normal policy and include:

• Fire, lightning, explosion.
• Storm, flood, weight of snow.
• Subsidence, heave or landslip.
• Escape of water and oil leaks.
• Falling trees, aerials or satellites.
• Vehicle and aircraft impact.
• Riot or civil commotion.
• Malicious damage.
• Theft following a forced break-in.

Cover responds quickly in the event your property suffers damage while exposed during the renovation.

Existing Contents Cover

Your household contents remain covered against the standard range of risks while works are ongoing. This includes:

• Fire, smoke, lightning, explosion.
• Storm, flood.
• Theft, malicious damage.
• Escape of water.
• Accidental damage to mirrors and glass.
• Loss of metered water and oil.
• Alternative accommodation costs if needed.

High value items like jewellery and art may need declaring separately and/or be subject to upper limits. Check your policy documents for details.

Contract Works Cover

This ensures the permanent and temporary works against loss or damage during construction.

• All materials, fixtures and fittings are covered while on site or in transit.
• Temporary structures like scaffolding and hoardings.
• Hired plant tools and equipment.
• Damage to existing structures necessary to carry out works.

Standard risks covered include fire, storm, flood, theft, accidental damage etc. Subsidence is often excluded but can usually be added as an extension.

Cover limits match the full reinstatement value of the project, including professional fees and debris removal.

Public Liability Cover

Protects against legal liability for injury to third parties or damage to their property arising from the works. This includes:

• Injury to workers or visitors caused by negligence.
• Damage to neighbouring buildings due to collapse, subsidence etc.

The standard cover is £2-5 million, which can be increased if required. Employers’ liability is also included in covering injury to employees.

Professional Indemnity Cover

Covers architects, surveyors or engineers for negligence leading to damage or financial loss. This is included automatically on most policies.

Legal Expenses Cover

Provides access to legal advice and covers costs to pursue or defend certain claims related to the works. For example, contract disputes with builders.

Excess Options

You can choose between standard compulsory policy excesses of £250-£1000. Higher voluntary excesses can reduce premiums.

Terrorism Cover

Damage from terrorism may be included or available to add. This covers property damage and loss of revenue caused by terrorist acts.

Who Needs Renovation Insurance?

If you’re carrying out any building works on your home, you need specialist cover in place. This includes:

• Homeowners – If you’re managing the works yourself.
• Landlords – For any works on buy-to-let or rented properties.
• Developers – Building or renovating properties to sell on.

The policyholder is usually the homeowner in the case of domestic projects. For commercial schemes, the developer takes typically out cover.

You’ll need renovation insurance for projects like:

• Conversions – Garages, lofts and basements.
• Extensions – Conservatories, annexes etc.
• Major works – New roofs, walls, foundations.
• Refurbishments – Kitchens, bathrooms and electrics.
• Any structural changes – Removing walls, damp proofing.

Even small jobs like rewiring or plumbing may not be covered by standard policies during works. Check with your insurer if in doubt.

DIY projects are not normally covered, as contractors’ insurance is designed for works. You need to demonstrate planning consent and use of qualified tradespeople.

When Do You Need Renovation Insurance?

It would help if you took out renovation insurance as soon as works are agreed upon and scheduled to begin. This provides seamless coverage once your existing home policy is compromised.

Renovation cover should start when builders begin preparatory work like stripping out or erecting scaffolding. It can be pre-arranged to kick in automatically.

Policies typically run until works are practically completed, and the home is ready for habitation again. The finishing date is agreed upon with your insurer based on your builders’ schedule.

For major projects spanning several months, you may need a longer-term policy. But most renovations can be covered with a 3-6 month contract, renewable if required.

Don’t wait until the buildings are exposed before arranging insurance. Putting cover in place at the last minute could lead to problems and delays.

How Does Renovation Insurance Work?

• Choose an insurer or broker offering tailored renovation policies.
• Provide details of your existing home, contents, works, and timescale.
• Select required covers from existing structure, existing contents, contract works, liability, professional indemnity etc.
• Choose your preferred excess. Voluntary excesses can reduce premiums.
• Check the exclusions and limitations which apply to the policy.
• Confirm policy start and end dates based on your contractors’ schedules.
• Pay the full premium upfront – this can’t be spread over instalments.
• Works can begin from the start date once the cover is confirmed.
• Make the insurer aware of any work changes that may affect cover.
• Report any loss or damage immediately and comply with claims requirements.
• Pay any policy excess in the event of a claim.
• Cover ceases on the expiry date once works are practically finished.
• Inform your existing insurer when cover needs reactivating on completion.

Your broker can manage the whole process for you if required.

How Much Does Renovation Insurance Cost?

Premiums vary considerably depending on:

• Scope of works – Larger projects cost more to insure.
• Cover required – More sections increase the price.
• Existing property value – More valuable homes cost more.
• Excess level – Higher excesses reduce premiums.
• Duration – Longer projects are more expensive.
• Location – Inner cities cost more than rural areas.
• Security – Properties with alarms get better rates.

Typical ballpark costs for common projects:

• Small extension – £500-£1,500
• Major extension – £2,000-£4,000
• Loft conversion – £800-£2,000
• Full renovation – £3,000-£8,000+

Get quotes from multiple insurers to find the most competitive premium for your project. Using a broker can help secure discounted rates.

Consider renovation insurance as an investment to protect your property while improvements are made. The financial security it provides is well worth the relatively small cost compared to the overall project value.

What is Not Covered by Renovation Insurance?

While renovation policies are comprehensive, some exclusions still apply:

• Pre-existing damage not caused by the works.
• Contents not directly relevant to the contract work.
• Landscaping, fences and outdoor features.
• Works carried out by contractors not approved by the insurer.
• Non-compliance with building regulations or planning consent.
• Faulty/defective design, materials or workmanship.
• Gradual deterioration or lack of maintenance.
• Corrosion, rust, rot, mould or fungal damage etc.
• Pollution or contamination.
• Asbestos removal.
• Date recognition and computer viruses.
• Terrorism and civil commotion unless added.
• Contractual penalties and consequential loss.
• Existing structures/contents outside the property boundary.

Check your policy wording for full details of exclusions and limitations. The cover can sometimes be extended to include some of the above where required.

How to Choose the Best Renovation Insurance

The key considerations when choosing a policy are:

• Underwriter Reliability – Opt for insurers with excellent financial strength ratings to provide security and certainty of claims payment. Big names like Aviva, Direct Line and Zurich are good options. Or brokers with access to a panel of strong underwriters.
• Policy Flexibility – Look for a broad cover tailored to your project with add-ons like terrorism, subsidence and high-value content cover. Avoid restrictive providers.
• Premium Value – Shop around using comparison sites to get quotes from multiple insurers. A broker will access the whole market for you. Consider higher excesses to cut costs if appropriate.
• Knowledgeable Support – Choose an insurer or broker with specialist experience in renovation projects who can provide guidance. Look for customer feedback on service levels.
• Cover Limits – Check the standard limits on contract works, liability etc meet the scale of your project. Higher sums insured should be available.
• Fast Claims Service – Insurers with streamlined claims processes resolve issues quicker, so works isn’t held up. Ask providers about response times.
• Recommendations – See who builders, architects and previous customers recommend. Word of mouth is a great indicator of quality renovation insurance providers.

Taking time to make the right choice upfront avoids problems later on if you need to claim. Consulting an insurance broker for advice is highly recommended.

Renovation Insurance Claim Examples

To understand how renovation insurance works in practice, here are some examples of hypothetical claims:

Storm damage – Heavy rain and wind blow scaffolding into the roof, causing tiles to become dislodged and windows to smash. The existing structure cover responds to repair damage to the roof and windows. Contract works cover pays to replace the scaffolding and fix any other storm-related damage.

Fire – A fault in temporary lighting ignites timber beams and materials being used for a loft conversion. The contract works cover pays for damaged and destroyed building materials and professional fees to reconstruct the new loft. Fire damage to the existing roof structure would be covered under the current buildings section.

Theft – Opportunist thieves remove roof tiles from a property having its roof replaced and steal new copper piping stored on site. The contract works cover pays to replace stolen materials and upgrade security. If any contents were taken, the existing contents cover would respond.

Subsidence – Foundation excavations during an extension cause movement and cracking in the main house walls. As long as not excluded by an exclusion, the existing buildings cover pays for underpinning and repairs to stabilize the property.

Injury – A roofer falls from scaffolding breaking their leg. The public liability cover pays their medical expenses, loss of earnings and any other settlement due.

Damage – A stone mason accidentally smashes a hole through a wall of the existing house while manoeuvring into place. The contract works cover pays for repairs as it occurred during construction.

These examples illustrate the breadth of risks protected by a renovation policy.

Frequently Asked Questions

Conclusion

Renovating your home is an exciting project and a significant investment in your property. But building works inevitably come with risks of damage.

Standard home insurance simply does not cut it when walls are knocked down, roofs are stripped, and extensions built. Gaps in cover could leave you seriously out of pocket if things go wrong.

That’s why specialist renovation insurance is an absolute must. For a small premium relative to the project cost, tailored policies remove worries by protecting your home, contents and liability risks during work.

When choosing cover, check insurers offer broad, flexible protection for your project. Look for strong financial backing and excellent claims service, too.

Taking out the right upfront policy ensures that your investment is safe. You can then focus entirely on creating your dream home, knowing the risks are covered.