How do renovations affect home insurance?
10/04/2020
A look at what customers need to know when planning home renovations.
There are many important considerations for homeowners when planning renovations. What will it cost? How long will it take? Is planning permission required?
Unfortunately, one issue that many people overlook is how renovations could affect their home insurance. Here, we discuss some of the most important risks to consider during property renovations, and explain how these risk factors can impact home insurance.
1. Theft and vandalism
As well as the risk of building materials and equipment being stolen, the contents within a home could be more vulnerable to thieves during renovations, for example if doors, windows and other features that would normally restrict access to a property are removed. Depending on the scope of work being carried out, a home may also be unoccupied for extended periods during a renovation, increasing its vulnerability to theft and vandalism.
2. Material damage
Renovation frequently involves ripping out walls and floors, which could expose utility lines and pipes and increase the risk of gas leaks or escape of water. Escape of water is one of the leading causes of domestic property claims, and in the last three years, the total cost of escape of water claims has risen by nearly a quarter.
If windows, roofs or external doors are removed, this could also increase the risk of water damage from flooding or storms.
Even a seemingly minor issue - a broken window or a slipped tile following a day of strong winds, for example - could lead to incursion of water, which could significantly increase the risk of damp if the property is left empty for an extended period. Customers should therefore ensure they are satisfied their contractor has robust procedures in place for securing and weatherproofing their home - not just before work begins, but throughout the duration of the renovation project. In addition, homeowners should consider the potential for damage to neighbouring properties - e.g. if work is being carried out on a boundary wall in a semi-detached property.
3. Physical injury
Any construction or renovation project carries a degree of physical risk, no matter how well managed. Potential scenarios could include fires resulting from hot works or electrical installations, items falling from scaffolding, or even simple trips or slips due to the presence of building materials. Customers should ensure their contractor has adequate public liability insurance to provide cover in the event of injury to people who are not their staff (e.g. neighbours/visitors), as a result of the work being carried out.
4. Failure to notify insurer/broker
The risks outlined above could be exacerbated if the customer fails to notify their insurer or broker before beginning their renovation project. Some home insurers may withdraw cover for larger, longer or more complex renovation work, leaving the customer requiring a specialist renovation insurance policy. It is therefore vital that customers check with their broker or insurer beforehand, to ensure they have adequate cover for the work they are planning.
For an insurer, the increased risk of issues such as theft, vandalism and escape of water inevitably alters the risk profile of a property while renovations are taking place. However, just as importantly, once the work is finished, the property could be worth significantly more than it was before, and the cost of reinstating it in the event of a loss could also increase. This is another reason why it is vital that customers notify their broker or insurer when planning a significant renovation. Not just to mitigate additional risks, but to reduce the risk of underinsurance by ensuring they continue to set an adequate sum insured for their revamped property.
For more information, please get in touch with your local Zurich contact.
