Guide to Insurance for Non-Standard Construction Properties

A helpfully simple and straight forward definition that distinguishes a standard property construction from a non-standard construction property appears on the website Property and may be summarised as follows:

• a standard property is one built with brick or stone walls, topped by a tiled or slate roof; whilst
• a non-standard property is one built of any other materials.

Although such a definition may help to narrow things down somewhat the range and variety of different types of non-standard property is surprisingly wide. It might include, for example, buildings that fall into one of the following broad categories:

• practically any kind of prefabricated housing, including the iconic “prefabs” which sprang up immediately after the Second World War;
• properties with a thatched roof;
• homes built around steel or timber frames;
• buildings with flat roofs or shingles;
• eco-homes; and
• although many have standard walls of brick or stone and a tiled or slate roof, any listed building is conventionally classified by insurers and mortgage lenders as non-standard.

Prefabs

Prefabs were designed as a cheap and cheerful solution to an immediate post-war housing crisis. They were erected mainly in those cities most badly affected by wartime bombing. Although they were probably never intended to provide long-term or permanent housing, even 70 years after the event some are still occupied by their residents.

Despite the intention of providing cheaper housing units, prefabs actually turned out to be more expensive than conventional dwellings to construct. Partly as a result of this prefabs accounted for only 156,623 of the total of more than one million new homes built during the period from 1945 until 1951.

Despite the relatively small numbers, perhaps one of the biggest surprises, however, is to discover just how many different types of prefab were designed and built to meet the housing needs of the time. Wikipedia, for example, offers thumbnail descriptions of no less than 17 different types of non-standard construction used to build different kinds of prefab – with names such as the Smith System build, the Airey, the Laing Easi-Form, the Tarran, the Uni-Seco and the Wimpey no-fines.

For reasons that may become apparent, if you are thinking of buying one of the remaining examples of this type of property it might prove important to identify the type of construction by its particular name.

Thatched cottages

There are, of course, far more examples of buildings with thatched roofs. Attractive as this may make the dwelling in appearance, it nevertheless represents a non-standard form of construction.

Listed buildings

There are 374,081 listed buildings in England, says English Heritage, so they represent a quite significant proportion of non-standard properties.

92% of listed buildings are categorised as Grade II and the ones most likely to belong to homeowners. Listing does not rule out alteration, remodelling or extension, but it does require special planning consent from your local authority.

More rigorous planning control is exercised over the remaining listed buildings categorised as Grade I or Grade II*.

Why is it important whether I own a non-standard property?

It may prove a very important consideration very early in the process of home ownership.

If you need to borrow the capital to buy the property, you need to be aware that mortgage lenders are generally reluctant to advance loans on non-standard buildings which they typically regard as “unsafe to lend”. The reasons for this include:

• the relatively low demand in the market place for non-standard construction, making it potentially more difficult for the lender to recover the loan if you default on repayments;
• because it is more difficult to maintain a building constructed from concrete or timber there is a greater danger of it falling into disrepair – again undermining any lender’s ability to recover the full value of any outstanding mortgage;
• difficulties in maintaining a listed building may give rise to similar preoccupations and where the costs of repairs using original materials may be well above the norm; and
• where thatched roofs are concerned, there remains an ever present danger of devastating fire that may reduce the value of the building at a stroke.

Why won’t standard home insurance suffice?

For very similar reasons that mortgage lenders may decide that a non-standard property is not “safe to lend”, many insurers may also decline a proposal for insurance – simply because the risks are regarded as unacceptable.

Home insurance – just as any other kind of insurance – is a question of the insurer balancing the risks of loss or damage, and the cost of making good, against the premiums required to cover those risks. The policy wording of your home insurance cover describes in every detail what is covered and what is not. Clearly, this takes into account the type of construction methods employed and the materials used.

When you make your application for insurance cover, you are invariably asked to describe the type of construction of the building you want to insure – and whether you intend to occupy it yourself or let it to tenants, for example.

If the insurer decides that it is non-standard, you may find it more than usually difficult to arrange cover, unless you look for the type of specialist insurance in which we here at GSI Insurance are particularly experienced in finding. Indeed, if any other insurer turns you down or imposes unacceptable restrictions on the cover you want, then we are almost certain to find the specialist insurance to meet the needs for your non-standard property.

Some construction techniques may be immediately apparent as non-standard – such as wattle and daub walls or asbestos or corrugated iron roofs. Sometimes, however, you might not be aware of the limitations and restrictions recognised by standard home insurance policies.

An example is where the roof of the property has been “turnerised” – a process by which the roof is covered with a mesh and then painted over with bitumen in an attempt to repair leaks or other deteriorations. The process makes it practically impossible to re-use or re-cycle materials which have been subject to such treatment. Any incident giving rise to an insurance claim might therefore require more expensive remedial works.

Standard home insurance, therefore, is likely to exclude these and many other risks associated with non-standard forms of construction or types of building material. If you are buying such a property, you may need to be aware that standard home insurance is unlikely to suffice – because very many of the risks to which your home may continue to be exposed are simply not covered.

What to do if you have a non-standard risk in your property

Perhaps the most immediate problem is finding out whether your property – or one you intend to buy – actually has any non-standard forms of construction or use of materials.

Although some non-standard features – such as a thatched roof – may be obvious even to a completely untrained eye; other elements, however, may need to be identified by a competent and fully trained surveyor who is a member of the Royal Institute of Chartered Surveyors (RICS).

If you are buying the property with the help of a mortgage, you may find that the lender insists on a survey being conducted as a condition of any loan. Even here, though, some caution may need to be exercised in your choice of the type of survey conducted. RICS surveys are conducted according to recognised standards but at three different levels of investigation:

Condition Report

• this is the most basic level of any survey and may highlight any urgent problems with the property;
• it is the cheapest of the three levels of survey; but
• is generally appropriate only for new and conventionally constructed properties;

Homebuyer Report

• this is probably the most widely used of the three levels of survey;
• it includes the general condition report but also gives a market valuation of the property together with an estimate of the rebuilding costs (in the event of a total loss) for insurance purposes;
• although it is slightly more expensive than the basic condition report, according to professional surveyors – such as Martin Tate, at Surveyor Local – it is still only suitable for standard build homes that were constructed after 1960;

Building Survey

• this is the gold standard, comprehensive building survey;
• in addition to a detailed report on the condition of the property, this survey also offers advice about the need for on-going maintenance and whether any repairs are urgent or may wait a while;
• as you might expect, it is the most expensive of the surveys; but
• is likely to be essential if you are buying a non-standard property, an older or an especially large property, or if you are planning major refurbishment, remodelling or an extension.

It may be clear, therefore, that if you have any suspicion of the property being of non-standard construction or if it contains non-standard materials, a professional investigation is likely to be necessary.

In any older, larger or unusual property, the potential for non-standard risks is relatively high. Any non-standard construction techniques or choice of materials may not be apparent to the untrained eye, yet it is very important that your mortgage lender and your insurer be made aware of them. For that reason, a full survey of a non-standard property is more than usually important.

What will the insurer need to know?

The reason why providers of standard home insurance are likely to turn down your proposal for cover of a non-standard property is because it is likely to be very difficult to evaluate the risk of loss or damage to the building and the cost of meeting any claim.

This is also true for a specialist or non-standard home insurer, of course, but these providers are prepared to assume the risks – subject to your providing as much information as possible about the way your property was constructed and the materials used.

The information provides the basis for the contract between you and the insurer. It is very important, therefore, to ensure that you answer the insurer’s questions about the construction of your property as honestly and as accurately as possible.

The long-established basis for contracts of insurance is known by the Latin name of uberrimae fidei, which means utmost good faith. The onus is on you, therefore, to display utmost good faith in the answers and information you give to the insurer. Without doing so, you run the risk of invalidating the whole of any insurance policy that may be written.

For your own benefit and protection, for example, you are likely to have arranged a survey of your property – either prior to buying it or after you have moved in. One of the most helpful and accurate ways of putting your specialist insurer fully in the picture is to share whatever information the surveyor has reported about the construction, materials and general state of repair of the property.

Failing any detailed information from the survey, if you know the name of the design and construction method used – as described above – this may also help the insurer reach a clearer understanding of just what risks might be involved in extending cover to your property.

If your non-standard property has a thatched roof, there may be certain, common sense fire safety precautions your insurer may want you to take.

A useful guide to safety under a thatched roof is published by Hampshire Fire and Rescue Service and you may further your case with your specialist insurer if you are able to demonstrate that you have followed the tips and suggestions recommended by the fire brigade.

What your insurer needs to know about your non-standard property, therefore, is likely to be resolved on a case by case basis, according to the particular circumstances, condition, and construction of your home. The more detail you are able to provide, the better the chances you are likely to have in securing the cover your need at a price you may afford.

Calculating the sum insured

The cover you are likely to want for your non-standard property is typically the same as you may want for a conventionally built house – protection against such major risks as fire, storm damage, flooding, and impacts of one kind or another.

Your non-standard insurance cover is designed to provide just that degree of protection.

As with any kind of building insurance, however, safeguarding the property involves a calculation of the total sum you intend to insure – and that total is typically designed to cover the cost of completely reconstructing or reinstating the building in the event of a catastrophic loss, such as that caused by a fire, for example.

Getting it right is important, since if you are underinsured, you may find that any insurance settlement is insufficient to replace your home.

According to the Association of British Insurers (AIB), some 20% of British households are underinsured. In the case of a listed building, a thatched cottages or indeed any non-standard property, the risk of getting the reconstruction cost wrong and leaving yourself underinsured is probably greater than ever.

There are ready reckoners available – such as that produced by the AIB – but these are necessarily based on taking room-size measurements of a standard home with walls made of brick or blocks and roof that is tiled. Calculating the cost of a non-standard property is likely to prove a completely different kettle of fish.

Indeed, so tricky is it likely to prove that the most appropriate course of action may be to call in the experts, such as properly qualified surveyors and valuers. Surveyors are likely to have at their finger-tips or have access to the prices of the materials involved, the nature of the original construction and the requirements of any modern planning permissions in order to calculate the cost of rebuilding your home if the worst comes to the worst.

Moreover, if you took the precaution of instructing a surveyor to conduct the full Building Survey, mentioned previously, you are likely to have ready access to a reliable calculation of the sum insured – although you might want to remember to keep the calculation fully up to date.

Summary

There are many different types of non-standard property where the construction methods and materials have involved more than four brick-built walls and a tiled roof.

If yours is a thatched cottage or a listed building, it might be quite apparent that it is somewhat out of the ordinary. But there are many other construction techniques – some dating back to the immediate post-war period – that also make them non-standard in the eyes of mortgage lenders and insurers. Getting the distinction right between a standard and non-standard building, therefore, is clearly important.

Because standard home insurance is unlikely to suffice – indeed, most standard home insurers are likely to turn down your request for cover – you may want to seek out specialist insurance providers which have the expertise and experience in arranging specialist cover at competitive rates.

Determining whether your property has non-standard risks may prove too great a challenge for the untrained eye, so the help of a professionally qualified surveyor may be appropriate. In any event, it is important to be scrupulously honest with your insurer about the construction characteristics and building materials used in your home – at the risk of completely invalidating the cover.

Help from a surveyor may also be required when it comes to calculating the sum insured and avoiding the trap which one in five homeowners seem to fallen into by leaving their property underinsured.

Owning a non-standard property can bring an immense amount of joy, as you may have a quirky, historic or a chocolate box type home. Making sure it is adequately protected with the most appropriate insurance may allow you to sleep that just bit easier at night.