UK homeowners love to remodel their homes, with reports suggesting that up to 90 per cent of all homeowners in the UK have carried out renovations on their properties in the past five years. While home renovations can be an exciting way to add value and extra comfort to a home, many fail to realize that such work could significantly impact home insurance costs. In fact, many people who are carrying out such renovations could inadvertently be invalidating their insurance policy outright. Other problems, such as hiring uncertified labour and adjusting important home security systems during renovation can also affect insurance premiums. Knowing how home improvement projects cause insurance premiums to change is essential before undertaking any major renovation. This article will look at how renovations and extensions to a home affect insurance and what homeowners should do to make sure they are adequately covered.
Invalidated Policies
According to Property Wire, 52 per cent of individuals who carry out major extensions to their property fail to inform their insurance providers that they are doing so. This situation has created a major problem for many people, most of whom do not realize the level of financial insecurity they have exposed themselves to. Because of these daunting statistics, up to a third of these people may be paying for a home insurance policy which is no longer valid. The reason is because a home insurance policy is based around the current structure of a property; whenever any changes to that property are made, the previous policy is no longer valid for that property. After all, since the value of a property increases after renovation, the rebuild value (upon which insurance premiums are calculated) also increases. This potential for having an invalid policy is especially true if a load bearing wall is removed or the doors and windows of a property are significantly altered.
Increased Premiums
While some insurance policies will take into account renovation work, most won’t, especially if the house is being altered in any major way. Thus, it is extremely important for homeowners to always check their insurance policy before carrying out any work. Even certain aspects of a renovation that may not be considered by the homeowner at first could significantly impact his premiums. For example, if, during a home extension, the security or fire alarm system has to be removed, then the insurance provider needs to be notified. Most insurance providers offer discounted premiums to customers with security systems installed on their properties, meaning that if any damage happens to the property while those systems are disabled then the owner may find it impossible to make a claim.
What to know during renovation
While renovations to a property can be exciting, they also expose a house to increased risk of damage. Because most home insurance policies will not cover damage to a property incurred during renovation work, it is vital to get extra cover in the form of accidental damage. Accidental damage will cost a fair bit extra, but it is well worth the investment to make sure a homeowner’s renovation project doesn’t end up costing him more than he can afford. Additionally, while many UK homeowners prefer to rely on cash labour for home projects, this situation could become costly if anything goes wrong. Without adequate paperwork for the labour involved, it will be almost impossible to make a claim should the professionals hired end up damaging the property. Also, it is vital to make sure that the professionals hired for the project are certified, and homeowners should also have liability insurance to protect them from potential lawsuits that could develop should a worker be injured on the construction site.
A home renovation should be a chance to make a property a better place to live in and easier to sell should the need arise. Without adequate home insurance cover, however, such renovations could quickly turn into a very expensive nightmare. Projects of this sort can have a significant impact on home insurance costs, and failing to notify a provider about such projects could invalidate a policy. For the best peace of mind, homeowners should be clear about what their current policy does and doesn’t cover, and they should always get the protection they need before embarking on any major home improvement work.