What is insurance for self-builders?

Q. What is self-build insurance?

A. Self-build insurance isn’t just one product. It’s a collection of covers designed to make sure your self-build project is covered from the point at which you have a self-build plot, through the build phase, during the transition from a build to a home, and after completion.

Q. When might self-build insurance be needed?

A. It’s a simple enough question but the answer may not be so obvious. We‘ll look at individual covers in detail but the key stages in a self-build project where you might need, or must have, insurance are:

Arranging finance. If you’re going to borrow money to finance your self-build, you may require a mortgage. Before they will lend money for a self-build project, most lenders will require that a Structural Warranty policy is in place, or will seek assurance that a Structural Warranty policy will be in place from the completion of build. Purchasing a Structural Warranty policy at the outset of your project can be cheaper than buying it at completion.

Looking for a plot. At this stage, you may not require specialist self-build insurance, but if you’ve purchased equipment, materials or fittings in preparation, you should make sure you have an insurance policy with sufficient cover in case of theft or damage.

Owning land. Once you’ve acquired land, you have insurance liabilities. People visiting your land, with or without your permission, could be injured or killed. Without Public Liability insurance, you could be financially liable for injuries while on your site. If you’re liable and you don’t have Public Liability insurance, it could make a serious dent in your self-build budget.

Owning a plot. Self-build Site Liability insurance can be purchased to protect your plot once you’ve started the process of applying for planning permission.

The build. Once work starts, you have an increased need for self-build insurance. With builders, suppliers, materials, tools, plant and machinery potentially all on site, there are a lot of considerations. The new building itself will start to have a value as well, and should be insured before completion.

Completing the build. As you move through final fix, decorating and installing appliances, you may start thinking about moving in. As the value of items within the property increases, be sure to check that everything is covered, and that limits are high enough.

Moving in. You’re finished! You should now consider having buildings and contents insurance in place. Some self-build policies automatically provide a level of home insurance cover, so be sure to check before you buy.

After completion. Once finished, a Structural Warranty policy is designed to cover the costs of making good if the build was defective due to design, materials or workmanship. Mortgage lenders usually require this to be in place prior to lending but it comes into effect at build completion.

Q. Am I required to have self-build insurance?

A. With a self-build project, the only insurance that the law requires you to have are Employers’ Liability insurance, which is required if you directly employ people, and/ or appropriate car or van insurance. However, given the financial sums involved, and the potential risks you’re likely to face during the project, saving money by not having a self-build insurance policy could prove to be a false economy.

Q. What insurance should I consider?

A. Aside from the insurance that is required by law such as Employers’ Liability, (see above) the insurance you should consider comes down to your attitude to risk, the way you’re going about your project, and the financial impact should you need to make a claim, or if a claim is made against you. We’ve listed a range of covers that you may want to consider, all of which are detailed below:

Public Liability: Your liabilities should someone be killed or injured while on your self-build site.

Employers’ Liability: Your liabilities should someone you employ be killed or injured while working for you on your site.

Contract Works: The cost of replacing or repairing the structure being built, which in the case of a new self-build is the property itself, should it be damaged or destroyed.

Contractors All Risks: An alternative name for Contract Works.

Tools: The cost of replacing stolen portable tools that are owned by your employees.

Personal Belongings: The cost of replacing your belongings stored on site whilst you complete your build.

Personal Accident: A sum of money if you suffer a permanent disability, such as the loss of limb, or death while on site.

Legal Expenses: Legal costs arising from contractual disputes between you and your contractor, utility companies, or the removal of squatters from site during the course of the build.

Buildings: The cost of repairing or replacing the finished property.

Contents: The cost of replacing contents within the finished property.

Materials: The cost of replacing materials you own that are stolen from your site.

Hired-in Plant: The cost of replacing and repairing Plant you’ve hired, including hire charges that you may be liable for.

Owned Plant: The cost of repairing or replacing Plant you own that’s stolen or damaged.

Temporary Buildings: The cost of repairing or replacing temporary buildings, such as portakabins, that are damaged while on site.

Structural Warranty: The cost of making good a property if the build was defective due to design, materials or workmanship. This usually covers a period of 10 years.

Q. What does Public Liability insurance cover?

A. Public Liability insurance is designed to pay the legal costs and any compensation payments that you could be liable for if someone, other than you or an employee, is killed or injured while on the site, as well as accidental loss or damage to third party property.

Q. Is Public Liability insurance required by the law?

A. No. Public Liability insurance isn’t required by law in Great Britain, Northern Ireland the Channel Isles or the Isle of Man – other than in some rare circumstances. If you run a business where the actions of you, your employees or sub-contractors could cause damage or injury to people or property, Public Liability insurance can help you to protect both yourself and your budget.

Q. What is Employers’ Liability insurance?

A. Employers’ Liability insurance is designed to pay your legal liabilities should your employees be killed, or injured while working for you in connection with your business, or contract a disease as a result of that work. This cover can include compensation for death, injury or illness, the employee’s costs and expenses, and your costs and expenses incurred in defending yourself, such as legal fees.

The Health and Safety Executive (HSE) state: “Employers are responsible for the health and safety of their employees while they are at work. Your employees may be injured at work or they, or your former employees, may become ill as a result of their work while in your employment. They might try to claim compensation from you if they believe you are responsible. The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have at least a minimum level of insurance cover against any such claims.

Employers’ Liability insurance is designed to meet the cost of compensation for your employees’ injuries or illness whether they are caused on or off site. However, any injuries and illness relating to motor accidents that occur while your employees are working for you may be covered separately by your motor insurance.”

With death, injury and disablement and illness, coupled with associated legal costs, the potential costs can be significant. Being adequately covered for this risk is a legal requirement, and having sufficient cover is therefore essential.

Q. Is Employers’ Liability insurance required by law?

A. If you have employees, then Employers’ Liability insurance is a legal requirement. This is governed by The Employers’ Liability (Compulsory Insurance) Act 1969 in Great Britain, Northern Ireland, the Isle of Man and the Channel Islands.

Q. Will my contractors’ insurance cover me?

A. No. If you have a main contractor for your project, their insurance is designed to protect their business and their workforce.

Depending on your specific project, there are many insurance considerations that would not be protected by your contractors insurance, including your tools, owned plant, hired-in plant, or temporary structures. Your contractors insurance will not cover any staff that you employ directly, and you have a legal responsibility to have Employers’ Liability insurance if you employ staff. Your contractors’ insurance will not cover the part built structure of your project, so if this is damaged or destroyed, without your own insurance it wouldn’t be protected.

Q. What is Tools insurance?

A. Tools insurance is designed to cover hand tools, owned by you or your employees, against theft. Certain security measures should be in place to ensure the safety of these tools.

Q. What is Hired-In Plant insurance?

A. If you hire-in plant, and that plant is damaged or stolen, you may be liable for the replacement or repair costs, and/ or for continuing hire costs. Hired-in Plant insurance is designed to cover these costs.

Q. What is Owned Plant cover?

A. If you own plant, and that plant is damaged or stolen, you may need to repair or replace it. Owned Plant insurance is designed to cover these costs.

Q. What is Temporary Buildings cover?

A. If you have temporary buildings on site that you own, such as portakabins, and these are damaged or destroyed, Temporary Buildings cover is designed to cover the costs of repair or replacement.

Q. What is Personal Accident insurance?

A. Personal Accident insurance is designed to pay a lump sum of money if an insured individual is killed or suffers a defined permanent physical disability (e.g. loss of a limb, or loss of sight) while on the self-build site. It is available on our SelfBuild insurance, and Renovation & Conversion insurance policies.

Q. Who can have Personal Accident insurance?

A. You can choose to add Personal Accident for both the policyholder and/ or up to a total of 10 named individuals. The cover only applies up to 71st birthday of the insured individual. Personal Accident insurance is available on our SelfBuild insurance, and Renovation & Conversion insurance policies.

Q. What is Legal Expenses insurance?

A. During a self-build project, there are a number of situations in which litigation may occur. There could be contractual disputes between you and your contractor, utility companies, or the removal of squatters from site during the course of the build. If added to your policy, Legal Expenses insurance is designed to cover up to £50,000 of legal costs associated with these types of scenarios.

Q. What is Buildings insurance?

A. Where Buildings insurance is included within the policy (SelfBuild and Renovation & Conversion), it is designed to cover the completed building to the same value as the Contract Work value, and is effective for the period of cover between the end of build and the end of the policy. The sale/ market value of the completed property may not be the same as the rebuild value, so you should ensure that the buildings sum insured limit is sufficient. If you take out separate buildings and contents cover, the Buildings insurance cover within this policy ceases to be effective.

Q. What is/ are Contract Work(s)?

A. Contract Work, or Contract Works, is the term used to describe the part built structure that is the subject of the self-build insurance. As the build progresses, materials and labour are expended in the creation of the structure, and the structure starts to have a value. Should the worst happen, and the part-complete structure is damaged or destroyed, you should consider having insurance that will cover the structure to the state it was at the point of the insured event taking place. Depending on the nature of the event and claim, this could include clearance before reinstatement/ re-building commences.

Q. What is Contractors All Risks insurance?

A. Contractors All Risks (CAR) is there to protect the contract in place between you and your contractor(s). Also known as Contract Work(s) insurance, CAR insurance covers loss or damage to the build-in-progress and the materials used up until completion. It’s normally a joint policy between you and the contractor so that it doesn’t matter who causes the loss or damage.

Q. What Contract Works limit should I choose?

A. You should look closely at the total cost of labour and materials (including VAT as appropriate) that will be spent on the construction of the property. You then need to ensure that the sum you choose would fully cover the costs of getting the build back to an equivalent state that it was at the point that an insured event occurred. Depending on the nature of the event and claim, this could include clearance before reinstatement/ re-building commences.

Q. What is an Excess?

A. An Excess is a sum that will be deducted from the amount paid in the event of a claim payment being made. There are two primary types of Excess:

Compulsory Excess. A Compulsory Excess is one that is automatically added to a policy, or to a section of cover within a policy. You should check your policy schedule to understand the Compulsory Excess(es) that apply to a policy.

Voluntary Excess. A Voluntary Excess usually allows you to choose an additional, or higher, excess in return for a lower premium. When choosing a Voluntary Excess, you should be confident that in the event of a claim, the deduction of the Excess amount from any claim payment would not pose financial difficulties.

Excesses are cumulative, so if there are claims made against multiple parts of a policy, a number of excesses may apply, meaning that the total deduction from any payment made can be significant.

Q. What is meant by ‘part built structures’ on my site?

A. Part built structures are any incomplete structure that existed on the site prior to the commencement of the Contract. If you have existing part built structures on your site, we will need photos of them for our records.

Q. What is meant by an ‘existing structure’ on my site?

A. An existing structure is any structure that existed on the site prior to the commencement of the Contract. If you have existing structures on your site, we will need photos of them for our records.

Q. Will my existing insurance cover my renovation/ extension project?

A. Please see our “Renovation & Conversion FAQ” page.

Q. I have existing structures on my site. Can I take out your insurance?

A. If there are existing structures on your site, we will need to discuss your project with you. Please ring us on 0800 230 0225, or please leave your details in our Call Me form and one of our team will call you back during office hours.

Q. Will someone need to visit my self-build project?

A. There’s no requirement for us to make a site visit/ inspection if you wish to purchase one of our self-build policies. Very occasionally, if there’s a question regarding cover that can’t be explained over the phone or if you have an existing structure on your site, we may ask you to send in a photo.

In the event of a claim, it may be necessary for a Loss Adjuster to visit the site.

Q. Who will my SelfBuild insurer be?

A. Our Site Liability insurance, Self-Build insurance, Self-Build Pro insurance, and Renovation & Conversion insurance policies are provided and underwritten by Zurich Ltd.

We believe that partnering with an insurer as recognised and trusted as Zurich Ltd means you can be confident that in the event of a claim, you won’t be left worrying about whether the insurer is reliable. These Zurich Ltd backed products are exclusive to SelfBuild Insurance, and cannot be bought elsewhere.

Our Legal Expenses insurance policy insurer is UK General Insurance, also known as UK GI.

Q. Do you insure projects in Northern Ireland?

A. Yes, we insure projects in the United Kingdom, Northern Ireland, the Channel Islands and the Isle of Man.