Property Development & Renovation Insurance
A building being renovated falls between two policies, and the gap between them is where the uninsured losses happen.
The Gap Between Two Policies
A property owners policy assumes a finished building, occupied or at least habitable, with the services on and nobody cutting into the structure. A contractors all risks policy covers the new work: the materials, the work in progress, the thing being built. Neither of them, as standard, covers the existing structure of a building that is empty, open to the weather and being altered by people who are not you.
That gap is the whole subject of this page. The right arrangement is a renovation or conversion policy that insures the existing structure and the works together, in the names of everyone who has an interest, for a period long enough to cover overrun.
What Property Development & Renovation Insurance Covers
The existing structure
The building as it stands, while empty and while being worked on. This is the cover an ordinary contractors policy does not give you and an ordinary property policy withdraws once the building is unoccupied and altered.
The contract works
The new work itself: materials on site, work in place and work in progress, up to a stated contract value. The same cover a contractor would carry, arranged here so it sits alongside the structure rather than with a different insurer.
Public liability
Injury to neighbours, passers by and visitors arising from the site. Where you are the one engaging trades rather than a main contractor, this sits with you, usually at £5 million.
Employers' liability
Compulsory the moment anyone works under your direction, which on a self managed renovation includes labour only trades. The £5 million statutory minimum applies and policies are normally written at £10 million.
Plant, tools and site huts
Owned and hired in plant, scaffolding, and anything stored on site. Theft from a site that is visibly empty is the most predictable claim on this kind of project.
Joint names and the interest of others
Where a lender, a funder or a JCT contract requires it, the policy can be written in joint names so everyone with an interest has rights under it and the insurer cannot recover from the other party.
Where The Cover Stops
Wordings differ between insurers, so treat these as the usual position rather than as universal fact. Where one of them matters to you, it is worth checking on your own schedule before you need to.
Ordinary buildings cover lapsing on unoccupancy
A standard property policy narrows after a continuous unoccupied period, usually 30 or 45 days, and most renovations exceed that immediately. Escape of water, theft and malicious damage typically go first, which on a stripped building is most of what can happen.
Structural alteration as a material change
Removing a load bearing wall, underpinning or digging out a basement is a change to the risk, not a detail. Starting that work without telling the insurer can leave the whole policy arguable.
The contract value ceiling
Works cover carries a maximum contract value and a maximum period. Projects overrun, and a project that runs past the stated period is a project whose works are uninsured at exactly the point everyone has stopped paying attention.
Defective workmanship
The cost of redoing work that was done wrong is excluded, as on any works policy. Damage the defective work causes to the rest of the building may be covered, depending on the wording.
Subsidence during and after underpinning
Many wordings exclude subsidence where structural work is being carried out, or apply a higher excess. On a basement dig or an underpinning job this is worth confirming before the first machine arrives.
Who Insures The Existing Building?
This is the question to settle before work starts, in writing, and it is the one that most often goes unasked between an owner and a contractor.
Under standard JCT forms the answer differs depending on the job. A new build on a clear site puts the works with the contractor. Work to an existing building usually requires the employer, which is to say the owner, to insure the existing structure and the works in joint names. If you are the owner and you assumed your builder's policy covered your house, you are probably wrong, and if you are the builder and you assumed the owner's household policy covered the structure, you are probably wrong too.
Send us the insurance clause from the contract with the quote request. It takes a minute to read and it decides who buys what. Where there is no written contract, which is common on domestic refurbishments, the structure is yours to insure and the only question is whether your current insurer will carry it through the works.
Overrun Is The Normal Case, Not The Exception
Renovation policies are written for a period, typically six, twelve or eighteen months, with the contract works limit attached to it. Projects run late, and they run late for reasons nobody controls: a planning condition, a structural surprise, a contractor leaving, materials on lead time.
When the period expires the works cover stops. The building is still open, the scaffolding is still up and the site is still there, but the section that covered it has ended. Extending mid project is usually straightforward and almost always cheaper than the alternative, and insurers expect to be asked.
Build in headroom at the start. A twelve month project on a twelve month policy is a project that will spend its last weeks uninsured, and the premium difference between twelve and eighteen months is small next to that.
Empty, Visible And Worth Stealing
A renovation site advertises itself. Scaffolding, a skip and dark windows tell anyone passing that the building is empty and that there is copper, boilers, cable, tools and plant inside.
Insurers price security on this kind of risk more than on almost any other property, and the measures they ask about are specific: how the site is secured at night, whether there is a locked compound or container, whether tools and plant are removed at the end of each day, whether there is an alarm or monitored CCTV, and whether the scaffolding has alarmed or removable lower lifts.
Metal theft deserves its own mention. Lead from a roof and copper from a stripped building are the two things most likely to walk, and the damage done getting them out usually exceeds their scrap value several times over.
What Happens When The Works Finish
The end of a project is a change of risk and it needs telling. A renovation policy is not a property owners policy and will not simply continue as one.
If you are selling, cover has to run to completion rather than to practical completion of the building work, because an empty finished house awaiting a buyer is an unoccupied property with all that implies. If you are letting, the policy becomes a landlord or property owners risk on the day the tenancy starts, and the tenancy type drives the rating. If you are moving in, it becomes an ordinary household risk.
Three different answers, and the gap between the renovation policy ending and the right one starting is a real and avoidable exposure.
How To Choose Cover For A Renovation
Renovation cover is bought once, usually in a hurry, and the consequences of getting it wrong only appear when something happens. We are an FCA regulated broker and will not claim to be the best choice for your project. What follows is what actually decides whether the cover works, which you can judge any broker against, including us.
Does the quote cover the existing structure as well as the works?
This is the first question and the one that separates a renovation policy from a contractors policy sold as one. If the schedule only shows contract works, your building is not insured while it is being altered.
Is the period realistic, with headroom for overrun?
A broker who matches the policy period exactly to the programme has not allowed for the way projects actually run. Ask what happens if it runs over, and what extending costs.
Have they read the contract's insurance clause?
On JCT and similar forms the clause decides who insures what and in whose names. A broker who has not asked to see it is guessing, and a policy in the wrong name can be a breach of contract as well as a gap.
Do they ask what happens at the end?
Sell, let or move in are three different risks and three different policies. A broker thinking about the handover is thinking about the whole project rather than the quote in front of them.
Are the security conditions ones you can actually meet?
Conditions about removing tools nightly or securing scaffolding are binding. Better to negotiate them at the start than to discover after a theft that the site was never compliant.
Factually, we quote the existing structure and the works together rather than separately, we ask to see the contract's insurance clause before placing it, we build headroom into the period rather than matching the programme, and we diarise the end of the project so the next policy is in place before this one stops. Joint names are arranged at inception where the contract or a lender requires it, because they cannot be added convincingly afterwards.
We are a broker, so this goes to several insurers rather than one, and the markets that write renovation and conversion properly are not the ones that write ordinary household business.
What Moves The Price
Property of this kind is priced on the building and the way it is used rather than on a tariff, so a published figure would tell you nothing. What we can tell you is what the premium is actually built from.
- Value of the existing structure and of the contract works
- The nature of the work, particularly structural alteration and basements
- The period required, including headroom for overrun
- Whether the property is empty throughout
- Site security, and whether plant and tools stay overnight
- Whether you engage a main contractor or manage trades yourself
We are a broker, so we take it to several insurers rather than quoting one. Call 02382 000820 for a quote.
What We Need To Quote
- Reinstatement value of the existing building
- Contract value of the works and the expected period
- A description of the work, especially anything structural
- Whether there is a written contract, and its insurance clause
- How the site is secured, and what is left on site overnight
- What happens at the end: sell, let or occupy
Cover that often goes with this
The gaps we most often find sitting next to this policy.
- Contractors all riskThe works section explained in full, including joint names and sums insured.
- Unoccupied propertyWhat happens to cover once the building has been empty for 30 to 45 days.
- Property owners insuranceThe parent page, and the reinstatement cost mistake almost everyone makes.
- Property owners liabilityClaims from tenants, visitors and the public arising from the building itself.
- Talk to a brokerTell us how the building is used and we will tell you what it actually needs.
Common questions
Who insures a property while it is being renovated?+
Usually the owner, not the builder, and usually not under the existing household or landlord policy. A standard property policy narrows once the building has been unoccupied for a continuous period, typically 30 or 45 days, and structural alteration is a material change to the risk. The right arrangement is a renovation policy covering the existing structure and the contract works together. Where there is a written contract, its insurance clause decides who buys it and in whose names.
Does my builder's insurance cover my house during the work?+
Their public liability covers damage they cause to third parties and their contractors all risks covers the works they are building. Neither is designed to cover your existing building. On work to an existing structure, standard JCT forms generally put that obligation on the owner, often in joint names with the contractor. Assuming the builder has it is one of the most common and most expensive mistakes on a domestic project.
What insurance do I need to convert a commercial building to flats?+
The existing structure while empty and being altered, the contract works up to the full conversion value, public liability, and employers' liability if anyone works under your direction. A lender will usually require its interest noting and often joint names. Set the period with headroom, because conversions overrun more than most projects, and plan the handover to a property owners or landlord policy for the day the first tenancy starts.
What happens if my renovation runs over the policy period?+
The works cover ends on the date stated, whatever stage the project has reached. The building is still open and the site is still there, but that section has stopped. Extending is normally straightforward and insurers expect to be asked, so tell them as soon as you know rather than at the end. The sensible approach is to buy more period than the programme says you need at the outset.
Is subsidence covered while underpinning or digging a basement?+
Often not, or only with a higher excess, because the work itself disturbs the ground. Many wordings exclude subsidence during structural work. It is specifically worth confirming before anything starts, because it is one of the few exclusions that bites exactly when the risk is highest.
Do I need employers' liability if I am managing the trades myself?+
Almost certainly yes. Labour only trades working under your direction count as employees for the purposes of the Employers' Liability (Compulsory Insurance) Act, and it is the working arrangement that decides it rather than whether they invoice you. Genuine bona fide subcontractors with their own cover sit outside it, and you should keep copies of their certificates.
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