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First of all, before any works commence, you should notify your existing home insurer of your upcoming plans. At this stage, many standard home insurers will look to reduce cover or even cancel cover entirely exposing you and your home to an unacceptable level of risk. Therefore, in order to maintain comprehensive cover on the property and your works during construction, and so you can sleep easy at night, a renovations specific home insurance is a must.
Q: Why can’t I rely on my contractor’s liability insurance?
A: A contractor’s Public Liability insurance will only cover the contractor in the event that they cause damage or injury on site following negligent acts, errors or omissions. For example, it will cover the builder should they accidently burn down your house, although worth mentioning that it may be up to you as the property owner to prove negligence which is not necessarily straightforward!
However, this liability policy would not cover the property against other perils such as flood, storm, or theft from the site.
In any case, a properly laid out building works contract (such as JCT or RIBA) will clearly define the responsibilities of the contractor and the employer, including regarding insurance and a formal contract like this is always advisable.
Q: Property Owner’s Liability – what does this cover?
A: A property owner undertaking renovations should have Property Owner’s Liability. This provides cover for your costs in relation to third party damage “caused by” your property – and during works there are often lots of people coming in and out of the property so there’s increased risk. Many standard home insurers will limit liability cover during renovations, however if you go onto a renovations specific policy, then full Property Owner’s cover is provided.
Under a renovations specific policy, there are three possible options of liability cover available depending on how involved you are with the project:
1) Property Owner’s Liability Only –
appropriate when you have no involvement in the project management function and are not directly employing anyone.
2) Full Project Public Liability Only –
appropriate when you do have the project management function of Professional Project Manager but are not directly employing any Labour Only Sub-contractors (LOSCs). In this situation, bona-fide sub-contractors only are being used to carry out the works and these employees are covered by their Employer’s Liability policy.
3) Full Project Public Liability and Employer’s Liability –
appropriate when you are project managing or directly employing LOSCs. Even if you are not project managing, if LOSCs are being directly employed then this level of cover must be taken out.
Ensuring that you have the correct and most appropriate level of cover for your project is important. If you have any doubts about the correct level of cover that you should have for your project, then we would always recommend taking out increased levels with liability, it’s better to be safe than sorry as, whilst claims are infrequent, the related costs can be very high. Whatever the case may be, when undertaking project works it’s vital to take advice, so we would recommend speaking to an insurance broker who can guide you through the whole process.