Are you planning to renovate your home or office? As exciting as it is to get to work putting new designs into action, have you considered all the insurance requirements before you start?
Many people don’t realise that some types of renovations can invalidate their insurance policies, or that their builder’s insurance is usually designed to cover them, not you and your property. Keep reading to find out how you can keep your building covered and protect yourself financially against the risks of something going wrong with your renovation project.
What counts as renovation work?
While renovations, conversions, and extensions are typically grouped together under Building Regulations, they aren’t always the same thing. An extension usually involves adding an extra part to an existing building, while a conversion normally involves altering an existing building to adapt it to a different purpose (such as changing a commercial building into residential flats). You may want to consider temporary buildings during the renovation.
Meanwhile, a renovation project tends to involve smaller-scale alterations to a building. Though this work is often internal, minor interior refurbishments such as repainting or refurnishing may not count as renovations. Of course, if the building is older and requires more work – such as total rewiring and replumbing – then this can become as extensive a project as building a conservatory or converting a loft space.
There are many ways to renovate a property, from changing the windows and doors to knocking down partition walls. Any renovation work that could affect the structural safety of the building – including changes to walls, roofs, floors, stairs, chimneys, and utilities – is likely to also affect existing warranties and insurance terms for the property.
If you’re a homeowner hiring a builder or contractor to carry out renovation work on your property, you might think that your current home insurance and their builder’s insurance should cover all the bases, but this is rarely the case.
How do renovations affect home insurance?
When you initially set up your current home insurance, which should include contents insurance for your possessions kept on the property and building insurance for the building itself, the provider would have based your policy terms and premium costs on the specifications you provided at the time. When you carry out renovations, these specifications will change.
Therefore, you should contact your home insurance provider before carrying out these works to check whether you must alter or replace your policy. Some providers may allow you to update and extend your current coverage, while others may consider your policy invalidated and expect you to cancel it and take out a new one for the renovated version of your building.
If your provider won’t cover the risks to your home during renovations – be that increased risks of fire, weather, or structural damage – you may have to set up a temporary policy in the meantime to cover the works, before arranging updated building insurance once they’re completed.
If the finished renovations include significant changes to the value of your property – such as a new kitchen or bathroom, or adjusted floor plan – then your home insurance premiums may increase. You should make sure that all new fittings and furnishings are covered to their appropriate value.
Which insurance should builders have?
Just as you can’t expect your old home insurance to cover your newly renovated home, you can’t always rely on your builder’s own Ontario Contractor Insurance to cover the materials and labour you’re paying for. The builder or contractor you hire should have:
- Public liability insurance – for third-party accidents and injuries.
- Employers’ liability insurance – for employee accidents and injuries.
- Site insurance – for the construction site of the development.
- Contract works insurance – for potential damage to works in progress.
- Plant and tools insurance – to cover owned or hired equipment.
- Legal expenses cover – in case of contractual disputes.
When agreeing on a contract for your renovation works, you must make sure that you’re aware of any gaps in cover that you may be responsible for. The builder or contractor you’re working with will normally be covering their own interests, not necessarily yours as their client – which is why you should discuss a detailed contractors’ ‘all risk’ insurance policy with them.
Such a policy should protect you in the event of failure to complete works or problems with the finished works – but you’ll probably still have to prove negligence and determine the party at fault to secure financial compensation to cover the cost of any necessary remedial works.
If your planned renovations include structural alterations, it can be beneficial to set up a new building warranty to protect your financial investment against the risks of latent structural defects from poor workmanship or faulty materials.
Do you need a structural warranty for renovations?
While this type of insurance isn’t legally required for a renovation project, having a building warranty means that your newly updated structure will be protected against faulty building work. It’s definitely worth setting up a structural warranty at the start of your project to cover the renovated part of your building against potential structural defects.
On the other hand, for a large house extension, Eduard from Axe construction suggests a reputable building company should offer a structural guarantee for multiple years as a standard if they don’t choose a different builder.
Your builder should guarantee their work for at least a year, giving you an option for recourse for any issues with the renovation that they’re responsible for. However, a building warranty can offer 10 years or more of cover for more serious defects in structural renovation work.
Additionally, a builder’s or contractor’s warranty not only applies for a limited period, but is also limited to the homeowner who signed the contract – meaning that even if you sold the renovated home within their warranty period, the protection would not pass to the new buyer.
Your structural building warranty is attached to the renovated property, however, and not the person who owns it. This means that if you sell the renovated property during the cover period, which is more likely due to the extended term, then the financial protection against structural defects passes to the new buyer along with the building.
This makes the property much more attractive to buyers, whose mortgage lenders are likely to require a building warranty – so if you’re renovating with the aim of improving your home’s market price, it’s definitely worth setting up a structural warranty for your renovation project.
Images courtesy of unsplash.com and pexels.com
