Renovating a wreck? Consider the implications first

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Here at Renovation Insurance Brokers, we insure a wide range of properties in various states of repair. Even those that are uninhabitable wrecks at the point of purchase.

Dilapidated building

With the opportunity to add huge value following a refurbishment programme, renovators know that today’s wreck could be tomorrow’s goldmine. There’s even a dedicated website, Wreck of the Week that highlights crumbling structures that are available to buy and transform.

But profit is not necessarily guaranteed. Recent articles in The Times and The Daily Mail highlight that paying rock bottom prices for wrecked properties is a thing of the past. Buyers will still need to watch their costs and utilise plans which will maximise the property’s potential – even if the final scheme is not to their personal taste.

So what does buying a wreck mean from a renovation insurance point of view?

At Renovation Insurance Brokers, we’re not scared of heavy dilapidation, but it will come as no surprise to hear that we’d be taking a close look at the structural condition if you are looking to renovate a building of this nature, and we’ll probably want to see a current building survey report too.

Where there is structural instability, the liability insurance is going to be a lot more expensive too, so it’s possible that additional terms will be imposed on the insurance, for example, required maintenance or higher excess.

Our underwriters will also be considering the risk of malicious damage, vandalism and squatting. Properties which had been uninhabited for a long time are at higher risk, and this has implications on both the material damage and the liability side of things.

Tempted by buying a wreck?

A large scale renovation is a big investment, whatever the state of the property. However, with a wrecked building, you’d need to earmark a generous amount of extra time and increased financial contingencies to cover the discovery of hidden defects and complexities. In these cases, renovators can also do themselves a big favour by ensuring that there is a current structural report, and by spending some money ensuring that the property is fully securable.

Want to talk it through?

Our underwriters are on hand to talk to you about your property and your renovation plans. Just give us a call. You can also find lots more background on key considerations for large scale renovations in our online knowledge base.

Going underground – key insurance considerations for basement conversions

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Basement conversion

Basement conversations are a topic that we often comment on and our underwriters regularly place insurance for this form of project.  I was delighted to have the opportunity to speak to property journalist Nigel James recently, for a basement conversions article he was writing for ABSOLUTELY – a series of luxury lifestyle magazines for ultra-high net worth residents of London.

As Nigel’s article highlights – basement conversions in London are at an all-time high as many homeowners elect to sit tight and expand their homes rather than move and face a substantial Stamp Duty bill.

However, for those that plan to dig down to create a wholly new basement under a house, there’s a lot to think about – and not just limited to the build itself. The right insurance is essential.

The difficulty with basement conversions is that most people doing them have little acquired knowledge of such technical projects and unless you’ve got a good insurance broker who understands the issues, you are potentially leaving yourself open to some pretty serious consequences.

Here at Renovation Insurance Brokers, we deal with hundreds of basement conversion projects. If you’re planning your own, there are a few things we recommend you think about.

  • What insurance do you need? You usually need to cover the existing structure, the conversion work you are undertaking, injury on site and any Party Wall Act liability you may have. The level of liability you are exposing yourself to is actually quite high.
  • Who’s going to undertake the work? Another crucial area where homeowners must do their homework is to pick the right contractor. Unfortunately, many project managers and architects don’t help their clients undertake robust enough due diligence on potential builders before work starts.
  • Are you fully protected? It’s not just important to get you own insurance defined, you also need to ensure that your building contactor provides cover too. Your contractor will need to be able to show you their suitable liability cover for any damage caused by their own negligence. You’ll both also need non-negligent cover for any problems that arise that are not the fault of the builder, architect or structural engineer – such as a change in ground conditions during the build.
  • What are your timescales? It’s best to be flexible. Our data shows that 86% of basement conversions run over time and 84% run over budget. We often find that we are asked to extend insurance terms in light of project delays.

Read the recent article in ABSOLUTELY Clapham and Battersea for further insight on basement conversions in London – and do get in touch to talk with our expert team further if we can be of help to you in this specific renovation insurance area.

The importance of advice in the planning of a renovation

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Renovation in progress

The Home and Renovating Show starts at ExCeL London today. The exhibition is set to see thousands of people flock to what is described as the essential homebuilding and renovating event in the heart of London.

Research by real estate adviser Savills last year estimated that property owners in Britain added £6.5 billion to the value of the UK housing market in one year alone. With property renovation continuing to be buoyant in and around the London area particularly, we’re sure this weekend’s Home and Renovating Show will be popular.

We’re pleased to see an advice centre set up at the show which will offer one to one consultations with architects, planners, builders and architectural technologists; as well as experts from Homebuilding & Renovating magazine. It is often the case that when a decision is made to renovate a property, the renovator is very clear as to what they want to achieve in terms of the end result, but significantly less clear on how they are going to achieve it.

We can’t reiterate enough the importance of expert advice during the planning stages of a project. If this advice is not sought until the project start date is imminent, it may be too late to undo bad decisions.

Each of this weekend’s Home and Renovating Show experts will be well placed to advise on the areas of renovation that they operate in.  However, an area that won’t be covered this weekend, and one you might not even realise is key to your renovation, is tailored renovation insurance. On a large scale renovation project, your existing building insurer will struggle to meet your needs, and even if they’re prepared to try, there will be gaping holes in your cover.

Our underwriters speak to renovators each and every day – helping them identify their insurance needs and offering them tailored, peace of mind solutions. Regardless of whether you are attending the event or not, if you would like an overview, or some advice on the key insurance considerations for your project, just get in touch.

When looking to insure a renovation, there are many different factors to consider. Our online Knowledge Base can also help you understand which areas may apply most to you and your project.

You can find out more about The Home and Renovating Show here.

Project Liability Requirements – are you clear?

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project liability

As a specialist renovation insurer, our focus is on providing the right insurance for large renovation projects. We’re in the business of sourcing high quality, All Risks buildings and works insurance for structures in the course of renovation – something which the standard property market can’t cope with.

When undertaking a large renovation on your property, you don’t just need specialist property insurance – you need specialist liability insurance as well. Standard insurers usually aren’t positioned to provide anything other than standard liability cover so, once again, you’re likely to need the services of a contract works specialist broker. In our latest blog, our Senior Underwriter Matthew Dover looks at the three potential liability options which may be required from the point that your project starts.

What is Property Owners Liability cover?

If you’re appointing a main contractor who’ll be in complete control of the site, and you’re not involved in the project management function, then straightforward Property Owners Liability cover will be fine for you.

This type of insurance cover;

  • goes hand in hand with Buildings insurance, and covers your liability for third party injury or property damage stemming from defects in your property or land
  • will pick up your direct liabilities as a property owner, and provide you with legal defence costs should you be named as a co-respondent in an action against the contractor.

However, this type of cover DOES NOT cover project liability – injury or property damage stemming from the contract works themselves. The contractor, who is in full control of the site should have this cover.

“A large scale renovation requires a very specific renovation policy and accompanying insurance requirements. Our expert team is on hand to offer the very best and competitive insurance solutions for high value renovation project professionals. We can advise on the right approach to protect properties and renovators during such a significant project.”

Do you need Project Public Liability Insurance?

If you do have a role in project management (usually because there is no single contractor in full control of the site, but rather a series of sub-contractors are appointed directly by the renovator) then a wider form of liability cover is needed. We call this Project Public Liability Insurance. This will broaden the liability cover you hold to include third party injury or property damage stemming from the contract works themselves.

Generally speaking, here at Renovation Insurance Brokers we’ll be looking to satisfy ourselves that you have the relevant experience to manage a contract site. This is important, as there are legal requirements around health and safety and site management.

This cover will include Property Owners Liability in addition to Project Public Liability and is suitable where the contractors being appointed are all Bona Fide Sub Contractors (BFSCs). These are contractors who price a job, supply their own tools and materials and have their own liability insurances. They are not ‘Employees’.

As you’d expect, this insurance costs more, and requires more underwriting.

 Is Project Employer’s Liability required too?

If in addition to working with Bona Fide Sub Contractors you are also using casual labour, or Labour Only Sub-Contractors, then you’ll need to give some thought as to whether or not you have a legal obligation to arrange Employers Liability insurance. If you have workers who are paid a day rate by you, and undertake tasks instructed by you as a renovator, using tools and materials supplied by you then you are likely to be considered the Employer of these people and you’re going to need Project Employer’s Liability as well.

Of the three potential liability options you will have, this will be the most expensive. Contract sites are dangerous places and liability covers are priced accordingly.

Project Employer’s Liability is a compulsory insurance cover to hold, so specialist advice is required to make sure you have correctly identified your project liability requirements.

When undertaking a large scale renovation, we appreciate that you may not know which cover is suitable or essential for you. Here at Renovation Insurance Brokers, we are specialists in exactly that – so do get in touch and allow us to give you some advice around your upcoming project.

Renovation Insurance CPD training receives exceptional response from Brokers – we reflect on the success of our campaign

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As market leaders in placing Renovation Insurance, it’s important to us that we help brokers fully understand this very niche insurance area. To pledge our support to the brokers we work with, we launched a dedicated CPD training series at the beginning of this year; with our Managing Partner delivering on-site training to those brokers who requested it.

As our renovation insurance CPD training comes to a close this season, we reflect on the success of our campaign with some interesting facts and figures.

Broker CPD training infographic

Since its launch in January, we initially reserved a total of eight training days, which proceeded to fill within the space of a week and immediately showed the interest in the support and training on offer! A second and third set of dates was then released immediately to satisfy the demand.

As demand for our training continued to grow, in total we ran 42 individual CPD training sessions across the country, from the period January to June.

The feedback we received from brokers has been incredibly positive, with 98.3% stating they would be extremely likely to recommend our training to other brokers.

As renovation insurance specialists, it’s encouraging to see that brokers really do appreciate our expertise and support, whether that be through our training, online portal, or over the phone.

To request more information on our training or reserve a space on our next set of training dates, scheduled to commence from 1st September 2016, contact us here.

 

Underinsurance – under the spotlight

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RenovationUnderInsuranceThe term underinsurance might not be one that’s familiar to you, but it’s a significant issue in our industry. In our latest blog, we tell you what it is, why it’s an issue and who needs to be aware of it.

What is underinsurance?
In a nutshell, underinsurance is the provision of inadequate sums insured by the holder of an insurance policy. When you take out a renovation insurance policy, you are required to confirm the ‘rebuild’ value of the property (and any contents) that you want to insure along with the ‘contract value’ – a figure representing the total cost of the project to you. These figures are known as “the sums insured”. It’s important that the sums insured are correctly assessed.

In some cases, whether deliberately or not, the policyholder will declare a rebuild cost and/or a contract value which is lower than it should be. When this occurs, we call it underinsurance.

In the event of any claim, the confirmed sum insured value is what an insurer will pay out against. If that sum has been significantly underestimated, the claim pay out will be significantly reduced too. And in situations where the sums insured are grossly inadequate, the insurer is actually entitled to void the policy altogether.

We work very closely with brokers and renovators every day to identify the correct sums insured for new renovation projects; removing the very real risk of underinsurance. If we work with you, here’s what we’ll run through with you:

Building Sum Insured

We can guide you on the rebuild cost for a property in the event of a catastrophe. This figure is not the same as the ‘market value’ because the market value includes the price of the land your property sits on and other factors such as curb appeal.

  • Rebuild values are generally lower than market values for the reason stated above, but in the case of listed property, particularly Grade II* and Grade I, the reinstatement costs per square foot can be so high that the rebuild cost actually outstrips the market value.
  • We include VAT on the rebuild cost. Although new builds don’t attract VAT, most losses are only partial losses and, in these circumstances, VAT is applicable to the reinstatement costs.
  • The rebuild cost for a property can often be found on existing schedules of insurance, mortgage paperwork and/or formal building surveys. But bear in mind that, particularly in the case of existing schedules of insurance, there is no guarantee that the figure is correct. Additionally, if the documents referred to are more than a couple of years old, the figures are likely to be out of date.
  • Failing any of these, a rough idea can be gained by inputting a property’s square footage and postcode into the Building Cost Information Service (BCIS) from the Royal Institution of Chartered Surveyors (RICS).
  • If additional help is needed, we’d advise the instruction of a professional valuation, which would usually be around a few hundred pounds plus VAT for a standard property. Though this cost may stick in the throat, it will seem like money well spent when compared to the financial consequences of underinsurance.

Works Sum Insured

In a large scale renovation, a property owner or developer will be responsible for a number of costs and fees. We insure the total works sum – the total cash cost to the client – which should include:

  • the value of the main contract
  • the value of any subsidiary contracts
  • associated professional fees
  • direct purchases (such as bathrooms, kitchen, fittings etc.)
  • VAT where applicable

What happens if a renovation project is underinsured?
If a property owner or developer is in the unfortunate position of having to put a claim in for loss or damage to a property and/or the works themselves and there’s not enough insurance, there are going to be some serious financial implications.

Underinsurance is generally discovered when the loss adjuster appointed by the insurer turns up on site to assess the loss. He or she will, as a matter of course, and early on in the process, assess the adequacy of the declared sums insured.

If a property is found to be underinsured, the pay out for a claim is reduced in proportion to the percentage of underinsurance. For example, if a building is insured for £800k and it should have been insured for £1 million, then it is 20% underinsured. A claim for £10k would therefore be settled at £8k. A £2k shortfall that the insured is responsible for.

In the event of a large scale loss, a claim pay out may not cover the total cost of any rebuild, leaving the policyholder personally responsible for picking up the shortfall at a time of great disruption. Even worse, a large shortfall of funds made available in the claim pay-out may even leave the policyholder unable to complete the project.

Underinsurance isn’t something to be swept under the carpet. If a policyholder is underinsured, and attempts to make a claim, they will be found out. Make sure the property is adequately covered from the outset.

If you are looking to undertake a large scale renovation or are involved in a client’s renovation project, contact Renovation Insurance Brokers to discuss the insurance requirements. As the market leader in the sector, we are experts in placing renovation insurance. We’d be delighted to help you with yours.

Storm losses and the importance of Party Wall Insurance

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This article has been continued from our company newsletter, which can be found here: March Newsletter

Losses in sector during storm period

Though we avoided any serious problems during the extended period of storm conditions early in the year, we have had a couple of large losses. One relating to water damage and the other fire in a neighbouring property. Both are in London and both in the most expensive bracket which is disappointing, however it does go to show that losses in this sector do happen and when they do they are savagely expensive. I’d encourage you to look carefully at the standard cover and inner limits provided by competing products to make sure that your clients are adequately protected. It’s also a good opportunity to think about how you approach the contracts your clients are entering into and the strength of the insurers who back their contractors. It is not always the obvious areas that lead to problems so make every effort to know your client and assess the risks they are exposed to.

Importance of Party Wall insurance

Party Wall claims (Non-negligent Insurance) continue to occur with the highest frequency, though not always for the right reasons. As neighbours fall out over proposed renovations or damage caused as a result of a project, it’s clear that there are many misconceptions about what non-negligent insurance covers. We’ll be highlighting those in CPD sessions and information sheets to you over the coming months to try to tidy up this complex area.

If you think we could be doing something better then please let us know, it should be easy to do business with us.

Thanks as ever for your support.

Supporting a more unusual contract works requirement

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Here at Renovation Insurance Brokers, we are experts in placing insurance for large scale property renovations and part of this is an ability to provide good cover for non-standard items.

In one of our most unusual requests, we were recently asked to arrange cover for a £500,000 church organ which was going to be installed at an insured property.

The custom-made organ was manufactured on the continent and was shipped to the risk address for installation towards the end of the project. We covered this valuable and fragile item from the point it was offloaded on site; tagging it on from the point that the cover provided by the shipper ceased.

ContractWorksOrgan

When referring to a property’s contents, we are looking at items that are loose; things that are not actually attached the property. But with the organ ultimately due to be physically fixed to the building, it needed to be identified in another way; as part of the ‘contract works’.

An item such as this will only be classed as ‘fixtures and fittings’, and therefore part of the Buildings sum insured, from the point of practical completion. Until that point, it is classed as an item of ‘contract works’. This is true of any item which is to be affixed to the structure.

An exceptional renovation requirement for sure, but just another fine example of the importance of a specialist renovation insurance broker who can work to support unique requirements in large scale renovation projects.

We are often asked to protect contents left on site during a renovation project – find out more here:

Stating our approach to a stately home renovation

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It was recently announced by the National Trust that parts of Clandon Park House, the stately home that was reduced to a shell by a fire last April, are to be restored to their “original glory”. Read on for our outline of the key considerations for this type of large scale renovation project.

It is said that up to 95% of the Grade I-listed house, which featured in the 2008 film The Duchess starring Keira Knightley, was damaged in last year’s fire…so there’s a big renovation project ahead. As the market leader in placing renovation insurance, we know exactly what’s involved in renovating a property of this stature and historic sensitivity. Whilst we aren’t involved in the renovation of Clandon Park House specifically, we’ve used the property as the basis for this blog – highlighting the key points to note from a renovation insurance perspective for such a large scale stately home renovation.

ClandonParkHouse_Room

In all renovation works, the experience and competence of the contractor will be key. In the particular example of Clandon Park House, it becomes even more important. The restoration will be complex, will take a long time and the structure itself will be difficult to secure both structurally and from a security standpoint.

A suite of top notch liability insurances held by the contractor and the property owner will also be essential. The structure is likely to be unstable and relatively easy to access, and it’s likely there’ll be a lot of people on site at any one time. The potential for injury is quite high.

The plan is to restore the most important ground floor rooms at Clandon Park House to the majestic standard from the 18th Century, while the upper floors will be used for future exhibitions and events. In such a big project, and one that’s aiming to meet very exacting standards, it’s important that planning and conservation officers form part of the professional team. If they’re fully involved and welcomed this will maximise the likelihood of a smooth restoration all round.

Of course, using a construction specialist broker and insurer is essential – they will completely understand and appreciate the cover requirement and ensure the project gets the right cover. Large scale renovations like this are very individual. That’s why here at Renovation Insurance Brokers we take a bespoke approach to providing such specialist cover – exploring and understanding the individualities of every project and tailoring the insurance coverage to ensure the best possible cover.

_87768111_marble_hall2

Those involved in the restoration of Clandon Park House also need to be realistic about timescales. Structures of this type take a great deal of time to restore due to historic sensitivity. Being realistic about budget is important too. Restoration costs will be massively higher than a non-historic or non-sensitive structure of equal square footage.

In situations like this, a property owner has got to be prepared to spend a significant sum of money on the insurance package as part of the project budget too. Comprehensive cover for such an in depth project is important – and quality and credibly is key. It’s worth bearing in mind that where the damage being rectified is as the result of an insured event, the cost of specialist renovation insurance can form part of the claim under the previous property insurance coverage.

In any renovation project, you can never have too much information (the more the better) and open and transparent communication is hugely important throughout the process. There are likely to be changes to costings, interruptions in the progression of works and possible incidents on site. All these examples and many more like them have the potential to make the claim process fraught if insurers are not informed, so communication really is key.

We wish the very best of luck to all those involved in the Clandon Park House restoration. Our specialism is placing high value renovation insurance for a variety of properties – from Chelsea townhouses to country piles. We deal with unique renovation insurance requests here at Renovation Insurance Brokers every day. We’d be delighted to help you with yours.

Images courtesy of National Trust.

 

Renovation Insurance CPD makes waves in the broker market

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We’re hugely excited to have launched a formal CPD training series for brokers this year. The excellent relationships we hold with insurance brokers all over the country are very important to us.

We work with brokers to support their client’s complex renovation insurance needs. The advice and know-how these brokers provide to their clients makes them incredibly valuable and we are committed to supporting them.

We’ve been offering dedicated training to brokers for some time, but we are so confident as to what our structured training offers, that we have developed a unique campaign to fully engage with our broker partners and proactively highlight the impact our training can make. We have a range of training dates available and we travel directly to a broker site to deliver the session, at a time that’s best for them. All for free.

If you’re one of the brokers we work with – or you’re interested in becoming part of our network – take a look at the details here.

Our training sessions enable brokers to understand:

  • When the need for specialist contract works cover arises
  • How to ensure the widest cover for the buildings and works involved
  • Liability in a contract works situation
  • Party wall insurance
  • Contractual implications
  • The legal & regulatory environment

The Renovation Insurance Brokers CPD training series – another strong example as to our commitment to our stakeholders, our expertise in the sector and our overriding passion to support large scale renovations across the country.