Renovating a home can be an exciting process, whether it involves a simple cosmetic upgrade or a major structural overhaul. However, beyond design choices and budgeting, homeowners must consider the impact of renovations on their insurance coverage. Without the right protection, unexpected damages or accidents during the project could lead to significant financial losses.

Standard home insurance policies often have limitations when it comes to renovations. Certain types of work may not be covered, and failing to update a policy could leave a homeowner vulnerable to risks such as fire, theft, or structural damage. Additionally, hiring contractors without verifying their insurance can result in liability issues if accidents occur on-site.

Understanding the insurance requirements before starting a renovation ensures financial security and compliance with policy terms. Reviewing coverage options, such as builder’s risk insurance and contractor liability policies, can help homeowners protect their investment throughout the renovation process.

Builder’s Risk Insurance

Builder’s risk insurance is a specialised policy designed to cover a property during renovations or construction. Standard home insurance may not provide adequate protection if major structural work is involved, making this type of coverage essential for larger projects.

This policy typically covers damages caused by fire, theft, vandalism, and certain weather events while the work is ongoing. It applies to both the existing structure and any new materials or fixtures stored on-site. However, it does not usually cover accidents involving workers, which is why verifying contractor insurance is equally important.

The cost of builder’s risk insurance varies depending on factors such as project size, duration, and location. In some cases, contractors may carry this coverage, but homeowners should confirm policy details before assuming they are protected. If a renovation involves structural changes, temporary vacancy, or high-value materials, securing builder’s risk insurance can prevent unexpected financial setbacks.

Before starting a project, homeowners should consult their insurer to determine if this coverage is necessary. Some insurers allow temporary extensions to an existing home insurance policy, while others require separate coverage. Understanding these options ensures the property remains protected from potential risks throughout the renovation process.

Contractor's Insurance and Its Importance

Hiring a contractor with the right insurance coverage is crucial for protecting both the homeowner and the project. Without proper coverage, any accidents, damages, or legal disputes could become the homeowner’s responsibility.

Key Types of Contractor Insurance:

Public Liability Insurance – Covers injury or property damage caused by the contractor’s work. If a worker accidentally damages a neighbour’s property or a visitor is injured on-site, this insurance helps cover costs.
Employer’s Liability Insurance – Required by law in the UK if the contractor has employees. It provides compensation for worker injuries or illnesses related to the job.
Professional Indemnity Insurance – Protects against design flaws or poor workmanship that lead to financial losses for the homeowner.
Contractor’s All Risks Insurance – Covers damage to the work in progress, such as fire, flood, or theft of materials.

Before work begins, homeowners should:

✔️ Request proof of insurance from the contractor.

✔️ Confirm policy details, including coverage limits and exclusions.

✔️ Ensure subcontractors are also insured.

Verifying a contractor’s insurance ensures homeowners are not held financially responsible for unexpected incidents, reducing potential risks and costly legal disputes during renovations.

Adjusting Coverage Based on Renovation Scope

The type and extent of renovation work determine whether adjustments to home insurance are necessary. Insurers assess risk differently depending on whether the project involves minor upgrades or major structural changes.

Failing to update coverage can lead to underinsurance, which is a common issue among UK homeowners. Around 80% of UK commercial properties are underinsured, leaving owners financially vulnerable in the event of a claim. While this statistic refers to commercial properties, it highlights a widespread risk that homeowners should also consider.

Small-Scale Renovations (May Require Minimal Adjustments)

Projects such as repainting, installing new flooring, or updating kitchen cabinets usually do not require significant changes to an insurance policy. However, homeowners should still inform their insurer to ensure coverage remains valid.

Major Renovations (Often Require Policy Updates)

For larger projects, such as extensions, loft conversions, or structural modifications, homeowners may need to:

Increase the rebuild cost coverage – If the renovation significantly raises the property’s value, updating the policy ensures it reflects the new rebuild cost.
Add accidental damage coverage – Protects against mishaps like drilling into a pipe or breaking a window during construction.
Review liability coverage – Essential if homeowners will have workers or visitors on-site.

Failing to update insurance can leave gaps in coverage, leading to denied claims if damage occurs. Before starting renovations, homeowners should discuss the project with their insurer to determine if adjustments are needed and avoid potential financial risks.

Steps to Take Before Starting Your Renovation

Proper planning ensures that homeowners have the right insurance coverage before starting renovations. Taking these steps can help prevent unexpected costs and coverage gaps.

1. Notify Your Insurer

Before any work begins, homeowners should inform their insurance provider about the renovation. This ensures that the policy remains valid and can be adjusted to reflect new risks. Some insurers may temporarily change coverage terms or recommend additional policies.

2. Review Current Coverage

Homeowners should check if their existing policy covers:

Structural changes – Extensions, loft conversions, or major alterations may require an increase in rebuild cost coverage.
Personal property – Some policies cover damage to belongings during renovations, while others may exclude it.
Liability protection – Essential if homeowners are managing the project themselves and hiring independent tradespeople.

3. Confirm Contractor’s Insurance

If hiring a builder, homeowners should request proof of:

Public liability insurance – Covers property damage or injury caused by the contractor’s work.
Employer’s liability insurance – Protects against claims if workers are injured on-site.
Professional indemnity insurance – Relevant for architects or designers in case of professional errors.

4. Secure the Property

Renovations can make homes more vulnerable to theft or weather damage, so it is essential to secure the property beforehand. Homeowners should store valuables in a safe place and consider installing temporary security measures if necessary. Taking these precautions helps prevent unexpected costs and ensures the home remains protected throughout the renovation process.

Conclusion

Home insurance is essential when renovating as it helps protect against potential risks such as property damage, theft, and liability issues. Reviewing existing coverage, understanding additional policy options, and ensuring contractors have proper insurance can prevent costly setbacks. The level of coverage needed will depend on the scope of the renovation, so discussing the details with an insurer before work begins is crucial. Taking proactive steps, such as securing the property and keeping records of renovations, provides further protection.

For expert advice on designing a home extension that enhances both aesthetics and functionality, get in touch today at 07738 409199 or visit James Williamson Architecture to discuss your renovation plans with a RIBA chartered architect.

Frequently Asked Questions (FAQs)

1. Does my home insurance cover renovations?

Standard home insurance may not fully cover renovations. It is important to check with your insurer and update your policy if needed to avoid coverage gaps.

2. What happens if I don’t update my home insurance before renovating?

3. Do I need builder’s risk insurance for small renovations?

4. Does home insurance cover issues discovered during renovations?

5. Can I stay in my home during renovations, and does it affect insurance?

Do You Need Home Insurance When Renovating? What to Know Before You Start