Subsidence Cover During Renovations

If you’ve been shopping around for renovations insurance, you might be used to hearing that subsidence cover will be excluded.

Subsidence cover during renovations

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In some cases, this only applies while structural renovations are taking place, so once this part of the project completes, you may be able to include the cover while non-structural decoration finishes. With some specialist renovations policies however, this may be an automatic exclusion that can’t be changed. It’s worth asking your company about this at the beginning, as they can probably tell you how they operate before you commit.

Why is it excluded?

If a property starts to experience cracking at the same time as structural renovations are taking place, then it is usually quite easy to determine the cause.

Adding additional weight to subsoil can lead to settlement, and adding a building with deeper or shallower foundations than the main house can result in differential movement, both of which can cause cracks at the point where the two structures meet. Accidental damage to underground drainage that isn’t noticed can also cause heave, if the moisture level of the soil are affected, or can physically wash away foundations. The potential for damage is considerably higher.

The premiums and terms that make up insurance policies are based on risk. Therefore if there is a considerable chance of damage, it is likely the company would not want to expose themselves to it whatsoever. The other option is to increase the premium accordingly, but for such a high risk area, including subsidence would probably make the policies prohibatively expensive.

Plus, if you’re using outside contractors, the risk could well be covered elsewhere, by a policy they hold.

Public Liability Insurance & Contractors All Risk

Public liability insurance covers for claims made against a builder by third parties (such as you) who have been injured, or had their property damaged as a result of your building activities. It usually also includes products liability insurance for injury or damage as a result of a defect in a product that you have sold or supplied.

Contractors all risk insurance provides the contractor with protection their tools, the plant and equipment being used on site, as well as the materials required to get the job done. It is designed to protect against risks such as fire, floods, storms, malicious damage, vandalism and theft.

Most renovations insurance policies will only cover for buildings that have a certificate of practical completion issued, meaning that if any subsidence matters arise before the project is completed, the responsibility for putting it right tends to fall with the contractor, and the insurance provisions they have put in place.

In short, just because your home insurance policy isn’t providing cover for subsidence, it doesn’t necessarily mean it isn’t insured elsewhere. It is worth understanding the cover your contractors have in place.

Mortgages

It may seem strange to be talking about mortgages, or more specifically your mortgage company when it comes to renovating your home, but it’s a much more important consideration than you think.

You may remember needing to provide proof of home insurance to your mortgage company, and they may have asked to be shown on your insurance documents as well as a financial interest. Until you have paid off your mortgage, your home is effectively an investment for them, and one they will want to make sure stays protected.

It’s worth digging out your mortgage agreement – It may state something like a requirement to maintain “a full perils insurance policy” that may specifically include subsidence or flood in particular.

If this is the case, you’ll find yourself in breach of your mortgage agreement if your policy doesn’t include subsidence, even if it’s only for a few months while renovations take place. This can be annoying, especially if every insurer you speak to says the same thing.

The best way to proceed is to speak to your mortgage company and explain the situation. After all, once the renovations are completed, you’ve added value to the property that if anything, improves their position. Mortgage companies will usually understand your predicament, and be able to suggest a solution.

Whatever project you have in mind, GSI Insurance Services (Southern) Ltd. are on hand to help. Knowing that subsidence cover is likely to be excluded, we will work to give you the peace of mind you need to proceed. This could include advising you on the relevant questions to ask your contractor, ensuring that they have the cover in place in case subsidence occurs as a result of ongoing building work, or helping you explain the situation to your mortgage company. Give us a call on 0800 612 9376 or click “Get a Quote” to complete our online form.

Need some more information?

Why not read one of our other renovation insurance guides?