Top 10 Tips When Selling Renovation Insurance

It’s important to understand why customers buy insurance and why they choose a broker to buy it from.

The former is pretty clear for two reasons:

  1. The subject of the insurance is something they cannot afford to lose.
  2. They don’t know what’s going to happen in the immediate future.

So we solve the problems of adverse risk and unpredictability by providing them with insurance, in this instance for their home undergoing renovation. But why do they choose a broker to buy it from?  On the face of it everyone seems to have forgotten the answer to this question and it has nothing to do with price.

  1. The customer doesn’t understand what insurance is needed because it’s not just house insurance.
  2. The customer doesn’t know where to get this type of insurance.
  3. Nobody in a call centre understands it either.

So the client comes to you, usually late on in the pre-project period and makes an enquiry for JCT compliant insurance what should you do?  Are there any steps you can take to make the sales process smoother and less painful for you both?  Yes there are.

Try the following:

  1. Be direct and say that the insurance required is non-standard and only provided by a few underwriters, because most insurers decline.
  2. Make it clear that the reason for this is because of the claims record of property undergoing works.  Very large infrequent losses which are difficult to predict.
  3. Insurance companies like predictability in risk and this just doesn’t fit with their appetite.
  4. Reassure them that you will be able to arrange something in time.
  5. Use the quick quote calculator to provide an range of premium.
  6. If they are unpleasantly surprised make it clear that their home is becoming a building site and doesn’t represent a home any more.
  7. Say that the cost will be offset against the buildings insurance they would have had to pay, it’s not in addition to it.
  8. The cover includes their works and property owner’s liability which is important when riskier things are happening on the site.
  9. The JCT places an obligation upon them to insure and it’s better to stay in control of their largest single asset.
  10. The product that you are proposing to them is the closest thing to a good quality HNW home insurance.

These simple tactics give you time to win them over and help them understand what the implications of insuring badly are.  They also give you the opportunity to show your expertise and prove your worth to them.

At that point you are a respected and trusted advisor who can help them solve a very specific problem, you are providing value for money, which is what professional brokers do!

Main & Sub-contractors: Could Conflicting Joint Names Insurance Terms Expose Your Client’s Cover?

It’s important when the client’s contractor is joint insured that they understand the terms under which they and their sub-contractors are operating.  The intention of our policy is to insure the works and the structure from top to bottom, particularly when a JCT joint names contract is in place.

The problem arises when a client does not cascade the terms of the insurance to the contractors who are working for them, yet expects them to be bound by the policy terms and conditions.  This makes subrogation harder if a negligent act breaches a policy condition and, in the longer term, leads to higher rates for all.

Given that the intention of the wording is to insure the contract, whosoever undertakes the work (contractor or sub-contractor), it’s important that other contractual arrangements don’t get in the way.  As an example, if a main contractor’s terms and conditions specify that any sub-contractors are responsible for materials and their work until the end of the contract, it’s possible it could obstruct a payment being made on the basis that the client was not contractually obliged to insure the works; not great. Your client is not going to be happy if his own insurers tell him he has no cover, and that he should pursue the sub-contractor’s own works policy.

To cut this situation off we recommend that your clients advise their contractor of the insurance placed by them and send them a copy of the policy schedule and wording.  At the same time they should make it clear that the intention of the policy is to insure all works under the contract and that any terms stating otherwise between the main contractor to sub-contractors should be withdrawn.

We’ll be issuing guidance notes for main contractors very shortly to go out with all policies and would like you to help us make sure these filter down to contractors and their sub-contractors by pointing this situation out to your clients.

Whilst this introduces another layer of complexity to the arrangements, it does make sure that the lines of liability are clear such that claims can be settled quickly and fairly, whilst leaving the door open for subrogation if required.

In our upcoming policy review we’ll be looking to firm up this area by making it clear within the wording that regardless of the terms under which sub-contractors are operating, ours is the primary insurance and will react if an insured event occurs.

If you would like further information on this topic please email Douglas Brown on .