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This article explores the types of insurance required for uninhabitable properties, with real-world examples and case studies to help you make informed decisions.
Standard home insurance policies are designed for properties that are occupied and in good condition. When a property is vacant or undergoing works, the risks of vandalism, theft, fire, and structural damage increase significantly. As a result, insurers often exclude coverage for unoccupied or under-renovation properties.
This policy provides coverage for properties that are empty during renovation periods.
What It Covers:
Example:
Scenario: A property investor buys a house at auction that requires three months of renovation before it’s rentable.
Solution: The investor secures unoccupied property insurance to protect against break-ins and weather-related damage while the property is vacant.
Contract works insurance is vital if structural renovations or construction are involved.
What It Covers:
Damage to the property during works (e.g., fire, flood, or accidental damage caused by contractors).
Example Case Study:
Scenario: A homeowner plans a major extension to their property, including knocking down walls and adding new plumbing. Midway through the project, a fire breaks out, destroying part of the structure and some building materials.
Solution: With contract works insurance, the homeowner receives compensation to cover repair costs and replacement materials, allowing the project to continue without financial strain.
Public liability insurance protects against claims if someone is injured or their property is damaged due to the renovation works.
What It Covers:
Example Case Study:
Scenario: During a roof replacement project, debris falls and damages a neighbour’s car parked on the driveway. The neighbour files a claim for repairs.
Solution: Public liability insurance covers the cost of repairing the car, avoiding a potentially expensive out-of-pocket expense.
If you directly employ workers, rather than hiring a contractor, you are legally required to have employer’s liability insurance.
What It Covers:
Example:
Scenario: A property developer hires a team of builders for a loft conversion. Onebuilder slips and injures their back on-site.
Solution: Employer’s liability insurance covers medical expenses and potential compensation claims from the injured worker.
If you have valuable items or furnishings stored in the property during renovations, specialist contents insurance is recommended.
What It Covers:
Example:
Scenario: A homeowner stores kitchen appliances and furniture in the garage during a major renovation. Thieves break in and steal some of the items.
Solution: Contents insurance covers the cost of replacing the stolen items.
While contractors often have their own public liability and contract works insurance, their policies may not fully cover your property.
Tip: Always verify their coverage and ensure it aligns with your needs.
2. Not Informing Your Lender: bridging finance or a mortgage to fund the property purchase, the lender may have specific insurance requirements.
Tip: Notify your lender about the renovations and confirm their insurance expectations.
Building materials left on-site are a prime target for thieves. Ensure your policy covers the full value of stored items
Scenario: Full Renovation Project
Property Type: A derelict property purchased for £200,000, requiring £75,000 in renovations.
Insurance Requirements:
Outcome: The developer completes the project without financial loss, despite a minor flood on-site that required material replacement—fully covered by the contract works insurance.
Ans: Yes, contractor insurance protects their business, not your property. Always ensure you have adequate coverage for your property.
Ans: Policies can be short-term (3-6 months) or long-term, depending on the project timeline.
Ans: Without insurance, you bear full financial responsibility for any damage, theft, or accidents, which could significantly increase project costs.
Ans: Standard home insurance usually excludes properties that are vacant or undergoing major works. Specialist insurance is required.
Ans: Yes, many insurers offer combined policies that include unoccupied property insurance, contract works, and public liability.
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