Reducing the risks of renovations

Heightened levels of activity are being anticipated in the housing market, as house prices start to rise again.

For those considering trading up, renovation work can add significant value to existing properties.

However, there are a myriad of risks involved in home renovations, which could result in problems rather than profit. To help mitigate those risks, it is important to seek clarity from your insurance broker about the necessary insurance requirements.

Minor improvements, such as plumbing, may be covered by home insurance – depending on the policy and amount.

If the current policy does cover work up to a certain amount, it is important to inform your insurer of the start and completion dates of the work. There may not be an additional premium, but if your insurer is unaware and there is a claim, it might not be paid out.

Structural works, however, will require specialist renovation insurance cover.

Typically, this will cover damage to the existing structure of the property, accidental damage, personal accident cover for injuries due to the work, and public liability cover for accidents or injuries to others.

Specialist renovation insurance cover varies, so it is important to seek expert advice.

Contents cover, for example, may not be included, and this can prove extremely costly if roofs or ceilings collapse destroying high net worth possessions.

When undertaking renovation work, the risk to neighbouring properties should be considered.

Always check your contractor has public liability insurance for negligent damage. A party wall policy that covers any structural damage, not caused by anyone, can also be important.

Be aware that there does not need to be an actual party wall for liability to apply. Structural damage can occur to a neighbouring property, even if it is detached.

Joint Contract Tribunal (JCT) contracts can help ensure greater peace of mind.

They define the responsibilities of all parties involved in a renovation project and specify their obligations to each other.

JCTs clarify what work needs to be done, who is doing it, when they are doing it, and how much it will cost.

A contractor may cover works under their insurance policy, but there is always a risk that they could go bust, or walk off the job, before the renovation is completed.

A specialist renovation works policy normally includes cover for such scenarios, however, it is important to check with a specialist insurance broker. Cover for the site remains for a certain time, but there will be unoccupancy conditions, such as property and security inspections for material damage.

Before renovation works begin, detailed discussions with architects, insurers and contractors are essential. All parties should have a comprehensive understanding of the project and of all potential risks.

Done correctly, renovations could add thousands of pounds to the value of a property.