Howden Insurance: Don’t let insurance get in the way of a dream renovation

 

LPF Member Howden has a vast amount of experience in insurance (in particular construction insurance). So often, clients say “I don’t need to tell insurers about building works. What does it have to do with them?”. Turns out, quite a lot and whether it’s a renovation, extension or conversion, there are insurance implications. To avoid insurance getting in the way of a successful project, here are the main areas to think about.

  1. Is the property correctly insured during the building works?

  2. Once the project is complete, will the insurer’s fire and security requirements continue to be met?

  3. Will the property be correctly insured when the works are complete?

ENSURING THE PROPERTY IS CORRECTLY INSURED DURING THE BUILDING WORKS

Insuring a luxury property isn’t always straightforward, but add in building works and it becomes even more complex. Insurance policies will have a building works condition written into the wording, and if a client breaks this condition, they may find themselves without any cover at all. In addition to the existing home insurance policy, the following should also be considered:

  • The contract your client is signing with the builder. This often has an insurance clause which states who should be insuring what. Your client needs to ensure they comply with this so that they’re not in breach of contract. Some contracts require the property owner to insure the works in “joint names” with the builder. This can increase the cost and is not acceptable to most mainstream home insurers.

  • The builder’s insurance policy. The builder should have in place public liability insurance, but the presence of this doesn’t mean that the property is fully protected. It means that if the builder is negligent and has damaged the property, then his policy pays out. The builder may have a contractors all risks policy, which covers the works on the property, but not the existing structure. Your client could rely on this but they should seek advice first. The policy is not in the property owner’s name so they have no control over a claim on their own property and any claim is complicated by the existence of two policies.

  • Employee liability. Depending on the scale and complexity of the project, the property owner may need to purchase employee liability insurance.

Howden recommendation

They recommend that a renovation insurance policy is secured before the work begins. This type of specialist policy can cover the existing structure, the works in progress, plus public and employee liability. These policies may also include non-negligence cover which is insurance for damage to a neighbouring property where negligence cannot be proven.

MEETING INSURER FIRE AND SECURITY REQUIREMENTS

A fire and security system should be factored into a renovation at the planning stage. Several of our clients have completed a renovation only to find that the devices fitted (or not fitted) didn’t meet the insurer’s security conditions. In one instance, a newly refurbished bedroom suite had to undergo significant disruption to meet the insurer’s safety requirement. Here are a number of factors to consider:

  • Security alarms: By and large, when it comes to high value properties, insurers will require an alarm system with central station monitoring. There are policies that will require an NSI-approved central alarm system. Verisure or Simplisafe alarms may meet some insurer requirements, but it’s important to remember that these alarms are not NSI certified.

Howden recommendation

The installation of an alarm should be conducted by an accredited service provider:

When considering security, both during and post-project, remember to include garden space and outbuildings. They could be as attractive to burglars as the main property, and they’re just as important to protect.

  • Home safes. A home safe is a great way to protect valuables, as it’s the last line of defence against a potential threat. Having a home safe can also be a condition of a home insurance policy, so it therefore needs to meet insurer requirements – if it doesn’t then your client may not be covered in the event of a claim.

Howden recommendation

Choosing a safe can be a bit of a minefield. They advise as to what rating your client’s safe should have. More information about safes can be found in our article: What are the different grades of safe?.

For specific advice on home safes, Howden recommends:

They recommend (and insurers usually require) that clients use a professional safe company when installing a safe – not a general builder. A good safe installation company will survey the property before the installation and ensure that the safe is properly fitted so that it can’t be easily removed. As a broker, they’ve had claims in the past where the safe was screwed to chipboard and not securely fixed at all. Mike Cripps of TSI security advises:

“Any safe with a weight of less than 1,000kg needs to be fixed professionally. It’s important that the correct fixing bolts are used. Homes with underfloor heating, or those who choose to place their safe in a basement which has had water tanking carried out, may need another method like industrial bonding.

Sometimes rear fixing a safe to a solid wall can be carried out. Also, using a bespoke steel or concrete plinth can help create a stronger fixing. However, always consult with a recognised and established safe and vault company or speak to an insurance broker who may have companies they can recommend.”

  • Smart technology. The onward march of technology has brought with it devices that can improve the safety and security of properties, i.e. smart locks, smoke detection technology, and devices such as the HIVE or NEST. A word of warning though, not all of these will be acceptable to an insurer.

Howden recommendation

A specialist broker like Howden can advise as to whether planned smart technologies will meet insurer requirements. For example, smart locks such as the Yale L1, are a straight swap for many modern door handles, but not all insurers will accept them. They recommend that you speak to a specialist like Howden before installation commences.

  • Fire alarms. If a project results in a “material change to a premises”, then your client may need to review their fire alarm system. For example, projects which include a basement or sub-basement, or the creation of separate living quarters for staff, may require a fire alarm upgrade. 

Howden recommendation

Having the correct fire alarm system in place is vital, so it’s better your client knows what they need in advance of any works proceeding rather than finding out once the works are completed. They recommend a fire risk assessment and then a consultation with a BAFE-accredited alarm company. https://ifsm.org.uk/tier-level/tier-3-nationally-accredited-fire-risk-assessors-register-nafrar/

THE LEVEL OF COVER REQUIRED AT THE END OF THE PROJECT

Post project it’s important that your client doesn’t fall into the underinsurance trap and that they review their building sum insured.

A building sum insured is essentially the amount it would cost to rebuild a property from scratch. This includes:

  • All fixtures and fittings. Remember to include any lighting or sound equipment you may have installed and the cost of any newly fitted kitchen, appliances, wardrobes, or bathroom

  • Outside walls, terraces, walled gardens, patios, and driveways

  • Any outbuildings – sun houses, garden offices, tennis courts, guest annexes

  • Environmental upgrades you may have made – solar panels, triple glazing, or heat pumps

  • Underground drains or equipment connected to an oil tank if the property has oil-fired central heating

  • Materials, labour, and professional fees

Failure to increase the building sum insured upon completion of works may result in underinsurance. It’s the homeowner’s responsibility to set the buildings sums insured and it’s important to remember that there is no direct correlation between the market value of a property and the rebuild cost.

Howden recommendation

If your client is in any doubt as to whether their buildings sums insured is too low, Howden recommend they obtain a professional valuation of the property. Companies such as BCH or RCA can survey a property and advise of the rebuild cost. It’s important to note that this wouldn’t be a market valuation but a buildings reinstatement cost.

They work with BCH and RCA and would be happy to talk your client through the process. They can also submit requests and paperwork on their behalf. They’ll then make sure they’re properly insured and paying the right price for the most suitable policy. It’s just one of the many benefits of using a broker.

HOW CAN HOWDEN HELP?

Building works can be complicated and extensive, but there’s no reason why the cover should be. Providing advice is at the heart of everything they do, so they always offer clear, sensible, and independent guidance about what their clients should insure and how – so if they ever need to claim they can be confident in the claim’s success.

Plus, they offer more than just insurance advice – they introduce their clients to a range of other expert service providers, from valuation companies to property managers.

GET IN TOUCH

Howden is the 5th largest employee-owned business in the UK, and one of the largest insurance groups in the world. They manage premiums on behalf of millions of clients spanning 100 countries. If you need advice, innovation, have a problem to solve or a plan in place and need support executing, they are ready for just about anything. And if you simply want to get insurance off your to-do list with minimal fuss or drama, they’ll help you get it sorted.  

www.howdeninsurance.co.uk/private-client

If you’re involved in a renovation and want to talk to them about the insurance required, please contact:

Daryn Vanhinsbergh

T: 07889 810 825

 
Priya Rawal