Without doubt, the allure of undertaking a self-build project can be extremely exciting – from identifying and securing that perfect plot to bringing architect drawings to life. Preparation for any project of this nature is very important and before you even step foot on-site, you need to take the time to select your site insurance and warranty. Not only will this ensure that if problems do occur during your project – such as flooding, fire or theft – you have the means to overcome them, but it also allows for your build to get back on track as quickly as possible without incurring additional costs.
If you are taking out a self-build mortgage, your lender will require proof of site insurance before any funds are released. Furthermore, your site can be a dangerous place to work with a host of different contractors, so public liability cover in-place before works commence is paramount. And unless you are living on-site and/or have introduced advanced security and storage measures, site insurance will give you that additional reassurance that materials and equipment stored on-site are protected.
The cover should last for the period of your project and it is usually set up for an 18-month or two-year period, with the option to extend it if you have not finished the project by the end of the cover period. A single payment is usually made to cover the term of the policy and to give you value for money, some policies such as BuildStore’s BuildCare will convert the site insurance policy to buildings and contents cover for the remainder of the term period if you finish the build before the end of the policy.
I have a main contractor - do I still need site insurance?
If your contractor has adequate cover and you will not be employing any subcontractors or, if you have any of your own plant and materials on site you may not require site insurance. However, public liability is still your responsibility and you need to ensure that your builder maintains adequate cover at all times and that it covers the project, even when there are no workmen on site. After all, you have no control over whether a contractor has a current valid policy or has taken steps to renew.
In addition, the builder’s insurance is not likely to commence until they start work on the site so you would need public liability cover and cover for any existing structures, until this time. It is therefore often best to take out your own cover to ensure continuity of cover, should anything go wrong with the main contractor or their insurance.
While few people would buy a new house without a 10-year structural warranty, many self-builders ignore a warranty for their project and opt instead for Architect Certification of their property.
While this may save some money during the project, it could be a false economy as an Architect’s Certificate states only that the building has been built to the required minimum standard and is not an insurance policy. If there is a structural fault once your home is complete, it would be down to you, the home owner, to take legal action to prove that the structural fault was as a result of the Architect’s negligence. This is much less attractive than having an insurance policy which covers specific occurrences regardless of the problem or who is responsible.
In addition to this cover, the warranty normally includes a Site Technical Audit and “key stage” technical inspections. This not only gives you the comfort of knowing that your build is progressing properly, but if you are using an Advance Stage Payment mortgage it can also be used as the trigger for the next stage funds being released.
Should you decide to sell your property in the future, a policy such as the BuildCare 10 Year Structural Warranty will give potential purchasers the peace of mind that the building was completed professionally and is covered for 10 years from completion. Many banks and building societies are unwilling to provide funds on new, or newly converted properties less than 10 years old, unless covered by a structural warranty, so this is an extremely valuable sales tool.
All self-builders strive to have a smooth and problem-free build; however as Murphy’s Law states “if anything can go wrong, it will”, so with so much financial, time and personal commitment at stake, it naturally makes sense to protect your build and your future home from the outset.
As a rule, you should ensure your site insurance policy has comprehensive cover and protection, which includes:
• Public liability to provide protection against claims in respect of damage or injury to members of the public – for example, injury to trespassers or site visitors or damage to neighbouring underground services.
• Employer’s liability to provide protection against injury claims from sub-contractors. The self-builder often assumes the position of being an employer, even if the labour being used is self employed. It is therefore a legal requirement that you have this cover if you are employing anyone on site.
• Contract works to protect the building materials on site and the building in the course of construction. For example, if your building were to burn down before it is completed, site insurance would provide the money to get it rebuilt.
In addition to these, the following cover is usually included:
• Plant, machinery and tools both owned and hired in.
• Site huts, stores and caravan if you are living on-site during construction.
• Legal expenses where things go wrong, such as if you have problems with a professional working on the project or with the supplier of materials.