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What insurance does your self-build home need?

If you're building your own home, you've probably got enough on your plate, but one issue you can't afford to overlook is that of insurance.

Constructing a self-build home comes with a number of inherent risks and in this guide, we'll illustrate why having the right cover in place can make all the difference should a worst-case scenario occur.

An Introduction

While you'll undoubtedly be trying to conduct the build process in as safe a manner as possible, there's always an outside chance of unforeseen scenarios arising or unfortunate accidents occurring.

And when you examine the potential financial fallout of such an occurrence, it's easy to see why insurance is pretty much a necessity when it comes to self-build.

Lenders are also increasingly risk averse, with many requiring evidence of sufficient cover before committing funds to self-builders. Similarly, some types of insurance are a legal requirement when undertaking projects of this type – which means you won't be able to proceed without having the right kind of cover in place.

Potential Risks

Given the time, effort and money self-builders put into their homes – it's highly advisable to acknowledge and account for the potential risks that can take place during construction.

Some of the most common risks posed by this type of project include:

- Injury to workers (or yourself)

- Injury to trespassers that enter the site without permission

- Injury to members of the public (for instance, those visiting the site)

- The theft or vandalism of tools and building materials

- Defects

- Accidental damage

Types of cover

Self-build projects can take a number of forms – from one person working in near-isolation to project management or the use of a specialist contractor. The route you take will define the types of cover you'll need in place.

For instance, if you're responsible for project management, the liability will lie with your. However, if you're utilising a main contractor, you'll need to discuss insurance with them beforehand.

Even if the contractor has a good level of cover in place – it might still be a good idea to invest in certain types of insurance yourself, as taking the reins is the only way you can be sure you're covered in absolutely every eventuality.

While not exhaustive, some of the most commonly-sought self-build insurance cover includes:

Employer's Liability: If you've taken on the project manager's role, then the running of the site is up to you. In this case, the law classes you as the employer and as such, you could face potential legal action if anything happens to your 'employees' while on site.

If you're employing a general contractor, then the work may be covered (or at least mitigated) by their own policy. However, you shouldn't leave this to chance and should make sure you're aware of their level of cover and any additions you might need to procure well in advance of the project's start.

Contract works or All Risk: This type of policy ensures you're covered should the theft of materials or vehicles take place while on site. Contractors All Risks insurance also provide cover in case of structural or fire damage and most policies have a degree of customisation available, enabling you to nominate specific risks you're concerned about.

Public Liability: Once you own a plot of land, you'll be held responsible for any injuries that occur on it – even if those who are injured didn't have permission to be on it. This is one of the most important types of cover as injury claims have the potential to cost a pretty penny that could derail your self-build project, if not your finances altogether.

Structural Defects: If a problem with the building itself occurs post-construction, structural defect insurance will provide cover for you and any future owners of the property. While policies differ, they tend to cover the cost of work to rectify structural issues or fully (or partially) rebuild the house.

Miscellaneous: Given the growing popularity of self-build, many insurers have started rolling out specialised policies that offer a range of additional options, specifically geared towards this type of project.

These tend to include:

-  Cover for plant and other equipment (whether you lease or own it)

-  The equipment of contractors

- Personal injury

-  Mortgage payment protection

-  Contents insurance (if you're living in temporary accommodation for the duration of the project)

 

Specialists in Construction Insurance

-  Building and contents insurance (once the build is completed)

-  Cover for any extant or surrounding structures

-  Legal expenses cover.

However, if you're still concerned about insurance, it's well worth consulting a provider or discussing the issue with your legal advisor.

Policies and Payments

When it comes to self-build insurance, you're basically taking on the role of a very small developer. And as mentioned, given the potential scope of such projects - self-build insurers tend to offer a great deal of flexibility.

Insurers tend to set out their charges as a single premium, or over a pre-defined term until the project is completed. It's vital to read – and understand – the terms and conditions of different policies when conducting comparisons. Be sure to pay particular attention to any exclusions and excesses, as these can differ greatly between insurers and could radically alter how the policy works.

Given that the length of projects can differ, policies tend to run for 18 months – rather than the standard year. Similarly, many insurers will offer extensions, should the project overrun.

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