There are so many details to consider as you embark on a construction project, it can be easy to forget about insurance coverage.
But while most larger contractors have a policy in place for construction jobs, smaller contractors doing one-off jobs throughout the year might not – so it’s an important question to ask before work commences.
“The big problem that I think people need to be aware of is if you are building on to your house, say building another roof line or an addition to the square footage, if something were to happen to part of the house being built then it’s not going to be covered under your regular insurance policy,” said
Andrew Hanwell, BF&M’s head of commercial lines.
“If you’re only doing internal renovations, taking down some dry walls or changing fittings, then it might not be necessary, but it’s a good idea to contact your insurance provider to let them know the scope of your project to be sure.”
Potential risks during a project include any negligence on the part of the contractor and the risk that the new build is damaged by something like a fire, hurricane or malicious damage. Mr Hanwell said a home insurance policy will not kick in until the building is complete.
This is also a good time to adjust your sum insured, once your project is completed, so you aren’t underinsured after renovations.
The contractors all-risk policy also covers liability for any legal issues that might arise.
“A contractors all-risk policy is protecting both the contractor and the owner of the property,” said Mr Hanwell.
“If the contractor was to do something and make a mistake and knock down a wall, for example, the policy covers this sort of liability.
“The policy has an element of public liability, so if they damage a part of the house that they’re not working on or if they do something negligent and the house burns down then the liability can protect them, and therefore the owner as well.
“Also, for neighbouring properties, if you’re renovating your condo, for example, and the contractor damages a wall that goes through to a neighbouring unit that can be covered as well.”
The liability can also protect against any issues during the renovations where you might have to take the contractor to court, as well as if someone were to get hurt on the building site.
“The coverage is even broader than standard home insurance, which only covers specific named perils. For new build projects, the only way to have any insurance coverage during the building process is with a contractor’s all-risk policy.
“Say you are three-quarters of the way through building and it’s hurricane season and a big storm comes through and blows off your roof that’s just been put on, the key is that the only way to insure that structure is to get a contractor’s all-risk policy to get coverage while it’s being built,” Mr Hanwell said.
The all-risk policy can also cover contractor’s basic tools, equipment, materials, heavy machinery (that doesn’t fall under motor insurance) and any temporary buildings erected during the project. A 12-month warranty is also built into the policy for any issues that may arise after a project is completed and a contractor has to return to make repairs.
“The biggest benefit to coverage during construction is your home is the biggest investment you’ll have and this protects that asset if anything was to go wrong,” said Mr Hanwell.
“But also on the liability side, if someone gets badly injured and you’re held responsible, you can be protected. It’s peace of mind that protects your asset but also protects people who might seek to sue you due to injury or damage to property arising out of the construction works.”
