Site Insurance Explained

When embarking on a major self-build or renovation project, the better your planning and preparation, the smoother the build will be.

However, no matter how well organised you are, things can and do go wrong. Whether your project is a new build, renovation or conversion, you will require adequate protection to safeguard the construction project. This applies whether you are building property for your own occupation or if you are developing a house for profit.

Unexpected events such as a flood, fire or theft could seriously affect the timescale for the build and costs. Site insurance seeks to provide you with cover for all the things that can go wrong during your build and also covers materials and equipment on site. Remember, building sites are dangerous places, accidents happen and because the site is likely to be deserted at night, damage can occur and materials and machinery can be stolen.

The main protection provided by site insurance is:

• Public liability – this provides protection against claims in respect of damage or injury to members of the public (for example, injury to trespassers or site visitors or damage to neighbouring underground services).
• Employer’s liability – this provides protection against injury claims from sub-contractors. A self-builder often assumes the position of being an employer, even if the labour being used is self-employed. It is a legal requirement for you have this cover if you are employing anyone on site.
• Contract works – this protects the building materials on site and the building in course of construction. For example, if your building were to burn down before it is completed, site insurance would provide the money to get it rebuilt.

On top of these three main areas of cover, the following is usually included:

• Cover for plant, machinery and tools whether they are owned or hired in.
• Cover for site huts, stores and caravan if you are living on site during construction.
• Legal expenses – this gives you funds to take legal action if things go wrong, for example if you have problems with a professional working on the project or with a supplier.

You need cover to last for the period of your project. It is usually set up for an 18-month or two-year period with the option to extend it if you have not finished the project by the end of the cover period.

As soon as you own your plot or building being renovated, you become liable for any injuries to members of the public on your site, so site insurance should start as soon as you buy your plot. A single payment is made to cover the term of the policy and to give you value for money.

Some policies will convert the site insurance policy to buildings and contents cover for a three-month period if you finish the build before the end of the policy term.

If your contractor has adequate cover and you will not be employing any subcontractors or have any of your own plant and materials on site, then you may not need site insurance. However, you would still be liable for public liability and you need to make sure that your builder maintains adequate cover at all times, even when there are no workmen on site.

Be aware that the builders’ insurance is not likely to start until they begin work on the site so you will need public liability cover, plus cover for an existing structure if there is one sitting on your site, before any builders arrive. It is often best to take out your own cover to ensure continuity of cover should anything go wrong with the main contractor or their insurance.

When you ask for a quotation on a renovation, you need to give a reinstatement value for the part of the building that’s already there and then another value for the cost of the renovation. Both parts will then be covered. You are also likely to be asked for pictures of the existing building so that underwriters can see its present condition. If you intend to sell your property as soon as it is finished then you need to tell the insurer that you are developing for profit. This means they can charge the appropriate rate and so that you can be sure that they will pay out if there is a claim.

Claim examples

• Mr C hired an excavator to dig a trench on site. Whilst doing so the bucket of the excavator got stuck resulting in the clutch being burnt out. His Site Insurance company authorised the repairs and settled the bill direct with the hirer.
• Mr K was in the final stages of his build when vandals struck and set fire to the structure causing £40,000 of damage. The insurance company agreed the claim and paid out very quickly and completion of the house was only set back by three months.
• Ms T had taken the slate tiles off the roof of a barn she was converting. Before she could put them back on the roof, thieves stole the slate from site. The insurer settled the claim with the policyholder.
• Mr and Mrs D were in the process of building a wall when bad weather caused it to collapse. The insurer authorised the repairs and settled direct with the policyholder.