Content supplied by Self Build Zone
Compared to designing or choosing a building system site insurance is probably one of the dullest products out there — and one that certainly isn’t going to be prominent on your radar. However it’s not until you have been a ‘victim of crime’ – such as being targeted by an arsonist or on the end of a serious theft – that you can really appreciate just how important site insurance is. It can be a project saver.
Site insurance provides the key elements that you need in one straightforward package and it should be effective from exchange of contracts on your plot. Why? Because you need to protect yourself against claims from third parties.
Having taken out a policy, cover should then be continuous for your chosen period and will cover such items as the plant and machinery, workers, materials and the work in progress — right up to the point when you move in. Site insurance premiums are usually based on the ‘professional reinstatement cost’ and run for 12, 18 or 24 months. After that, short period policies may be available until the project is completed.
There are still many misconceptions surrounding site insurance, often fuelled by a lack of understanding (well, why should you know when insurance is probably not your profession). This leads many people to assume they simply don’t need it.
Here are the top 10 common misconceptions.
1. Surely the builder’s insurance covers me?
They may say they are fully insured and in a lot of cases probably believe it themselves, but the chances are that they actually only have public liability insurance. This only covers them in the event that they cause damage or injury to a third party following a negligent act — which of course you would have to prove and that can be a lengthy and costly process.
However Public Liability doesn’t cover issues like storm damage, theft of materials and plant, arson, or foreseen liability.
2. I’m going to use my home insurance to cover the work
Home insurance definitely does NOT cover building projects and in most cases specifically excludes alteration, renovation and extension as well as unoccupied property risks. This was recently explained in the BBC program Rip Off Britain, where a couple’s build project was totally destroyed by fire and the home insurer refused the claim.
Think about it — you might have to carry on paying the mortgage on a home that no longer exists.
3. The plant hire company always insures their own equipment
The person signing the hire contract is invariably responsible for repairing damaged plant or replacing it if it is 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 bear in mind even a small crane can cost several hundred thousand pounds to replace. Plant, tools and equipment can all be included on a site insurance policy.
4. If I choose to declare a lower value it will save me money on the premium
You should insure for the professional reinstatement value. This is not the same as what it cost you to build as a self builder, but what it would cost a professional team doing it from the start. This includes the removal of debris, professional fees and profit etc.
If the insurer identifies that you have deliberately declared the wrong amount, they will reduce the claim proportionately.
5. If the Builder damages my neighbour’s foundations then they are covered
This is a huge potential pitfall. If you are working close to your neighbour’s house and weaken the foundations then that damage will not be covered by public liability insurance. You need to make additional special arrangements with your site insurance provider to get adequate protection in place.
6. I can’t be held responsible if my builder slips off the scaffold, ladder or roof
The Health & Safety Executive has produced clear guidance for self builders so if you are managing or exercising control over the project you automatically carry responsibility and could end up being prosecuted and fined. Ignorance is no defence.
A worker who is paralysed could be looking at receiving compensation running to possibly millions of pounds to cover full time care, loss of potential earnings, and other costs inflicted by an accident.
7. I’m not going to bother with site insurance until I’m some way through the build
This is a short-sighted approach and if anything will end up costing you more money. Even if there is only three months to go, the insurance provider will charge you a premium based on the professional reinstatement cost declared at the outset.
8. The utility companies only charge a small fee for repairing damaged cables
Emergency utility repair bills can be thousands of pounds. And, it’s not just electricity, gas, and water to think about, but also expensive Fibre Optic cables.
9. Surely my site insurance will automatically renew?
Site insurance provides cover on a time/project base and is not renewable, so if you exceed the chosen period you will need to arrange another short period policy. We will tell you when the policy is coming to an end so you can make that choice.
Being project based cover you will not receive a return of premium should you finish the project early.
10. I think cover is on a ‘new for old’ basis
Clearly if an element of the property has to be rebuilt it will be reinstated professionally as new. However plant, tools and equipment are insured on an indemnity basis which means that a three-year-old digger will be settled at the replacement value of a similar digger of the same age.
Everyone’s needs are different as are projects which is why it’s really important you seek expert advice from a specialist site insurance provider.
Insurance is sometimes considered as the ultimate distress purchase — but it doesn’t have to be.