You’ve decided to renovate your house. You’ve got planning permission; you’ve appointed your architect and your contractor…
Now you need a contract.
Q. What do we need a contract for?
A. When undertaking renovation works on a property it is important to have a formal contract between yourself and your contractors. In addition to providing a formal legal framework for what tends to be a large transaction, from an insurance perspective this ensures that you and your home are fully protected. It also provides protection for your contractor.
Q. But we have a verbal agreement with the contractor
A. A verbal agreement is not going to get you anywhere if you have to make a claim as a result of damage occurring to your existing structure while the works are on-going, or any other issues that come about during the works.
Q. But if we have to claim won’t our existing insurance cover it?
A. Most insurers will reduce your home insurance cover to FLEEA during works or remove cover altogether. This means you are leaving your property exposed to malicious damage, subsidence, theft, flood and accidental damage and more, all of which would not be covered. We recommend taking out specific renovations insurance when undertaking works that will provide all risks cover.
Q. But then doesn’t the contractors insurance cover it?
A. No. The contractors insurance will cover the works but nothing on your existing property. Equally, if the damage/ potential claim is the fault of the contractor, do you want them to continue working on your project and do you trust them to have the necessary insurances in place to pay out on the claim. We also recommend that you request to view your contractor’s insurance policy and obtain confirmation that this is on cover.
Q. We want to keep our costs down.
A. The contract that we recommend is only £30.
The contract that we recommend for standard renovation work or self build project is a Joint Contract Tribunal (JCT). This is a template contract you can purchase online with various options depending on the level of the work being done (these are flexible, however);
- Minor Works JCT – suitable for non-complex works up to £250k or works sub £100k
- Intermediate Works JCT – suitable for complex works ranging from £50k to £1,000,000
Within the JCT there is an insurance section 5.4 that highlights who is responsible for insuring what. For example, under the Minor Works Contract, the options are as follows:
- A – Insurance of the works by Contractor in Joint Names
- B – Insurance of existing structure and the works by Employer in Joint Names
- C – Insurance of existing structure by Employer in own name
When taking out a specific renovations insurance policy, B is the one to go for – this ensures that cover is taken out by the property owner for both the building and works, with the contractor named on the policy. This has several advantages, including:
- Puts you, the property owner, in control
- Provides one single policy, with one insurer
- Only one excess
- The policy provides all risks cover on the existing property and the works for the duration of the project
There are of course other contracts that are also absolutely acceptable, the example given is simply based on the most common type of contract we deal with. It is important to remember that any contract is in place both to protect you but also the contractor and this insurance policy is equally advantageous to him ensuring that you are both fully covered should anything happen during the works.
Now all you have to worry about is if the work will finish on time…