Top 10 insurance questions answered
ever wondered why you need specialist site insurance when starting your extension project? Here’s what you need to know...
Q: Surely my builder’s insurance covers me?
A: Your builder may say they are ‘fully insured’ – and they probably believe it themselves – but the chances are they actually have public liability insurance which only covers them in the event they cause damage or injury to a third party following a negligent act: something you would have to prove. However, public liability insurance doesn’t cover issues like storm damage, theft of materials, theft of plant and equipment, arson or foreseen liability – essentially all the things you really do need covered.
Q: Can’t I just use my standard home insurance for the work?
A: Home insurance definitely doesn’t cover building projects and specifically excludes alterations, renovations and extensions as well as unoccupied properties. This was clearly explained in the BBC’S Rip Off Britain programme where a couple’s build project was totally destroyed by fire and their home insurer refused the claim. Think about it – you’d carry on paying the mortgage on a home that no longer exists.
Q: My plant hire company always insures their equipment, so why do I need more insurance?
A: The person signing the hire contract is invariably responsible for repairing damaged plant or replacing it if it’s lost or stolen while on hire. You are also responsible for the continuing hire charges until it is replaced. If you are hiring a crane and operator, you will be responsible, and even a small crane can cost hundreds of thousands of pounds to replace. Plant, tools and equipment can all be included on a site insurance policy.
Q: If I choose to insure for a lower value, will it save me money?
A: You should insure for a value representative of a professional contractor clearing the site and rebuilding your project from scratch – the reinstatement cost. If the insurer identifies that you have underinsured, they will reduce the claim proportionately.
Q: If my builder damages my neighbour’s foundations, isn’t this covered by their insurance?
A: This is a huge pitfall. If you are working close to your neighbour’s foundations and weaken them, that damage won’t be covered by public liability insurance and you will need to make special arrangements with your site insurance provider to get adequate protection in place.
Q: I can’t be held responsible if my builder slips off the scaffold or a ladder, can I?
A: The Health and Safety Executive has produced clear guidance for self-builders. If you are managing or exercising control over the project yourself, you automatically carry the responsibility and could end up being prosecuted and fined. A worker who is paralysed could be looking to receive compensation running into millions of pounds to cover full-time care and so forth. This is why you get employer’s and public liability cover on most site insurance policies.
Q: How much do utility companies usually charge for repairing their damaged cables?
A: Emergency utility repair bills can run into thousands of pounds – it’s not just electricity, think about gas and fibre optic cables, too.
Q: I don’t think I need to bother with site insurance until later in the build – is that right?
A: This is a short-sighted approach and, if anything, will end up costing you more money. Even if there are only three months to go on your build, the insurance provider will charge you a premium that is based on the reinstatement cost from the point the work started.
Q: Surely my insurance will automatically renew?
A: Site insurance provides projectbased cover and is not annually renewable, so if you run out of cover you will need to arrange an extension for it – you will not be offered a renewal. Equally, if you finish early, you will not be entitled to a refund.
Q: I think you get cover on a new-for-old basis..?
A: Clearly, if an element of the property has to be rebuilt it will be built new, however, plant tools and equipment are insured on an indemnity basis – so a three-year-old digger will be settled at the replacement value of a three-year-old digger and not as new. In reality everyone’s circumstances and projects are going to be different, which is why it’s really important you seek expert advice from a specialist site insurance provider before embarking on your build – it can literally save you thousands.
For more information, call 0345 230 9874, or visit selfbuildzone.com