Renovation insurance - when do you need it?

Carrying out major home renovations can boost the value of your property, but it’s sensible to buy renovation insurance to ensure you are protected against the risks involved and don’t end up paying the price if something goes wrong. Here’s what you need to know.

What is renovation insurance?

Renovation insurance is a type of insurance policy that is specifically designed to cover all the additional risks associated with home renovations. It will provide protection against damage to structures being built, and provide cover against injury for those carrying out the renovations.

How does it differ from a standard insurance policy?

A standard home insurance policy won’t usually cover you for these additional risks or it will have specified limits in place. This means it won’t be appropriate if you’re planning extensive home renovations such as a loft conversion or any structural alterations.

What should a renovation insurance policy cover?

The cover provided will vary depending on the policy, but typically you should be covered for:

• Damage to the new building and existing structure as a result of fire or flooding
• Theft of building materials, tools and equipment kept at the property
• Theft or damage of your personal possessions
• Damage to neighbouring properties caused by your renovations
• Protection for your property if it’s left unoccupied
• Public liability cover in the event someone is injured at your property while renovations are completed
• Employers’ liability cover to protect you against claims made by anyone working on the site in the event of injury or death
• Damage caused by subsidence, heave or landslip during the works

Do I have to take out renovation insurance?

Before starting any type of home renovation work, it is important to make sure you have adequate insurance in place to protect you if someone gets injured or your home is damaged during the renovations.

For fairly minor home improvements, such as the installation of a new kitchen, it’s worth contacting your current insurer to double check whether your standard home insurance policy already provides sufficient cover. It’s best practice to inform your insurer of any work being carried out on your home anyway.

But for more substantial home renovations you will need to take out a separate renovation insurance policy; an insurance for building works.

‘You’re not legally obliged to have renovation insurance, but if your home insurance policy is restricted during your project, you may have an exclusion that applies when damage is caused by the works, or your existing policy may actually be invalidated by structural works,’ says Brooke Crisp from Renovation Plan.

‘In this case, you will be relying on your contractor’s public liability policy to cover any potential loss. This could cause problems as it would only provide cover in the event of the contractor being negligent. The contractor would also not be providing cover for any existing structure which is there at the moment (i.e. your existing home itself).’

How much does renovation insurance cost?

The cost of renovation insurance will depend on a range of factors, including the expected length of the project, the estimated costs, the scope of the work being carried out, as well as the rebuild cost of the current property.

‘When purchasing renovation insurance, it is important to engage with your insurer as early as possible, providing them with as much detail as you can,’ says James Vaughan, development underwriter at specialist insurer Hiscox.

‘Some insurers have a preference of 30 days’ advanced notice of the project starting. Due to the complexity of building works, insurance quotes can often take longer to produce compared to a standard home insurance policy.’

How to compare renovation insurance

When comparing renovation insurance quotes, it’s important not to simply pick the cheapest one you find. Instead, make sure you check exactly what’s included in the policy and whether there are any exclusions.

‘Customers should be clear about what is going to be involved in the renovation such as timeframes, materials used and whether the home can be occupied whilst all the works are being completed,’ says Sarah Smith, head of home underwriting at LV= General Insurance. ‘

‘They should also understand any special terms, limits and conditions that will apply whilst the renovation is underway. This will allow the customer to check the cover meets their needs before purchasing.’

Where can I buy renovation insurance?

You can buy renovation insurance from a specialist insurer or broker online, such as:

• Hiscox
• Home Protect
• A Plan
• Renovation Plan

Do I need to change policies when the project is complete?

Some renovation insurance policies will provide continuous cover once the work is complete. But if not, you will need to revert to a standard buildings and home contents insurance policy, checking that you have the correct level of cover.

‘Renovations could add value to a property as well as the value of household contents,’ says Vaughan. ‘It is important to update the policy to ensure that the right insurance cover is in place.’