Warning for home owners over summer improvements

Home owners thinking of improving their properties over the summer have been warned to check credentials after it was revealed up to half the UK’s building contractors may be underinsured.

Experts at ConstructionInsure.co.uk claim that around half of all UK contracting firms, including builders, plumbers, roofers and electricians, do not have adequate insurance in place to cover their works.

They say the use of price comparison websites for insurance services has led to an epidemic of under insurance across the construction sector.

The news will cause headaches for households planning summer time extensions, loft conversions or other home improvement projects.

Even many large contracting firms with multi million pound turnovers don’t realise their insurance is unfit for purpose, the experts claim, warning that the use of insurance comparison websites often led to the purchase of an inadequate policy.

Inadequate cover puts home owners at risk of liability if things go wrong on the project. In some cases, this could lead to the home owner losing all their investment and having to find more money to complete work.

Mark Herbert of ConstructionInsure.co.uk said:

“Many homeowners forget to notify their insurance company that building works are taking place. A lot of insurers need to know if any works above the value of £30k are being carried out. Failure to notify insurers will void the policy if there was any form of claim. 

“Home owners also need to inspect insurance documents from prospect builders before agreeing to quotes and going ahead with works. Failure to do so could have disastrous consequences.

 “Every week we see numerous cases of contractors being severely underinsured and this is down to them not properly informing insurers about the nature of their work.

“From our enquiries we estimate around 50% of all UK contractors do not have adequate insurance in place.  Many contractors take out a basic policy and fail to check the small print which often includes caveats about the nature of the work they are covered for.

“They assume they are covered but the reality is the policy may not be worth the paper it is printed on if it doesn’t cover them for the work they are actually undertaking. 

“Contractors are not always to blame for this. Unfortunately, they might have gone on a comparison site which is the worst place to go as these sites will never be able to question and answer a client about their business like an experienced broker can to extract the correct risk information. 

“Builders and other contractors may feel they are saving money by taking out cheap insurance policies but if the policy doesn’t cover their needs it will be invalid anyway. 

“It is far better to buy the genuine peace of mind of knowing your work is properly insured than to throw away cash on a policy which isn’t fit for purpose.”

Mr Herbert said there is a legal requirement for contractors to make sure they are insured by giving their insurance company full disclosure on the nature of the work they undertake.

He said homeowners should ask builders and other tradesmen to produce insurance policies and check the small print to make sure all aspects of the job are covered.

He continued:

“The insurer needs to know everything about each project – from all planned work, to the staff employed to carry it out.

“Employment of staff can vary for each build, so insurers need to know about all work sub contracted out to construction companies or if labour only sub-contractors are used.

“General builders with standard cover for internal renovation works and public and employer’s liability cover may think that they’re covered for everything, but often they are only covered for employees, sub-contractors and any damage to a third-party property, leaving external works like lofts, new builds and extensions uninsured.

“If these works are being carried out by a contractor with just an employers and public liability policy in place they will not be covered. What is needed is a contractor’s combined insurance policy.

“Contractors also need to consider protecting themselves against other traders that are part of a client’s build – for example if you are the main contractor and another tradesperson makes a mistake on site and disappears, the client could make a claim against the main contractor if they can’t get hold of the other trader.

“If contractors don’t have the correct insurance to cover these costs, it could mean insolvency for the business, so it’s worth looking into a Contractor’s Combined Insurance to keep all party’s covered.”