The number of people extending their homes rather than moving has increased in recent years, leading to a shortage of property for sale in some areas and helping to push up prices in many parts of the country.
The attraction is clear; you can increase your home’s floor space without having the cost and hassle involved with moving to a new property.
You need to tell your insurer about any Building Works
However, what many homeowners don’t realise is that if they go about making the improvements in the wrong way they could be completely invalidating their home insurance.
Not only do you need to tell your home insurer exactly what sort of work you’re having done in advance of the work starting, you also need the right permissions and building controls in place.
By not doing so, you risk financial ruin. Imagine if the building work caused a fire which destroyed your home and possessions, but the insurance company wouldn’t pay out as you hadn’t told them the work was taking place?
Why your insurer needs to know
Any major or even fairly major building work increases the risk you present to an insurer.
When walls are being knocked down, roofs removed, steel beams inserted, foundations built, electrics overhauled and floors taken up, any number of accidents might happen which could damage the building which the insurer underwrites the cover for.
Additionally, having scaffolding erected and builders coming and going with spare keys also increases the security risk, for obvious reasons.
If your insurer isn’t told about what’s going to happen, it means the original terms under which your home cover was written no longer apply.
Larger home, but no insurance for the new space
Not only could claims for damage caused during the building work itself be rejected. If you also don’t indicate to your provider what the new lay out of your property is, again, any future claims could be invalid.
You may have added a loft bedroom, kitchen extension or even whole new floor; if anything goes wrong within the newly created area, the insurer can say that when they offered you insurance, the new space didn’t exist and so you can’t claim for something happening in an part of your home which ‘doesn’t exist’ for insurance purposes.
Building Work Insurance check list
So that you avoid making some potentially very costly errors, here are a number of the key points to bear in mind before the builder’s arrive:
- Tell your insurer – You need to let your insurer know exactly what work is going to be carried out well before it starts. The provider may even need to send a loss adjustor to work out what cover levels are needed during the work.
- Be clear and honest – Be up front with your insurer so that they cover everything that’s going to happen. Ask them directly if you need to increase your cover and possibly get it in writing if they say you don’t.
- Failing claims – Not telling your insurer about building work means that you won’t be able to claim for any damage and loss that occurs during the building process.
- New cover levels – The work, once complete, may mean that your existing cover levels need increasing (see below).
- Accidental damage – Consider adding accidental damage cover if it’s not already included as part of your policy; the likelihood of accidents occurring obviously increases dramatically during building work.
- Moving out for building work – If you move out for more than the allowable length of time as stipulated in your home cover (usually one month), it could also invalidate the policy.
- Consider buying legal cover – We’ve all heard horror stories involving cowboy builders and building firms going bust. Legal cover would ensure that if you get into dispute over shoddy workmanship or contractual agreements, you can afford the legal advice you need to get compensation.
Cover levels after building work is finished
You may need to not only change your cover to take into account the duration of the building work, but also the new configuration and additional space in your home once the work’s finished.
A new valuation would be needed for work that creates additional rooms and floor space, as well as any larger outbuildings.
Your cover levels might then need to increase to reflect the greater amount it would cost to re-build your home from scratch.
And it’s not just structural work that might mean you need to take a look at your cover. Fancy new kitchens and bathrooms could raise the re-build value of your property enough to warrant an increase in the level of buildings cover.