Picture this: you’ve finally decided to extend your property, you’ve saved the funds and planned meticulously to create a perfect space. But have you considered the potential risks involved if something goes wrong? Homeowners Charles and Biborka Bellhouse found out the hard way, landing themselves in a messy insurance dispute after their £2 million home was severely damaged by fire.
Why Your Standard Home Insurance Claim Might Not Cover Extensions
You might assume your existing property insurance will protect you fully during renovations. Unfortunately, that’s often not the case. The Bellhouses’ legal action against insurance company Zurich highlights a critical point: your insurer needs to know about any significant building works. Zurich refused to pay out their fire damage insurance claim because the couple had started extending their property without notifying the insurer. Zurich argued that the home extension invalidated their insurance policy.
In the Bellhouses’ case, the fire caused damage estimated at £600,000 to repair, with an additional £475,000 needed to replace valuable contents, including a luxury watch collection worth £300,000. Zurich’s refusal to pay out led the couple to launch legal action against the insurance company after the house fire.
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Contract Works Insurance: Your Shield Against Insurance Litigation
So, how can property owners prevent similar headaches? The answer lies in homeowners contract works insurance, a specific type of cover designed to protect a property during building works and extensions. Unlike standard home or landlords building policies, this type of insurance explicitly covers the risks associated with construction projects, including theft, accidental damage, and fire or weather damage insurance scenarios.
Without homeowners contract works insurance, you could face not only huge repair costs but also potentially costly legal battles. The Bellhouses’ case underscores how stressful insurance litigation can become. They even sought compensation for psychological damages from insurance claim refusal, illustrating how disputes impact more than just finances.
Avoiding Your Own Luxury Watch Insurance Claim Dispute
Beyond property damage, contents can also cause insurance nightmares. Expensive items like antique furniture and luxury watches often require separate or clearly stated insurance. For the Bellhouses, losing documentation and authenticity certificates for watches worth hundreds of thousands compounded their issues. Clearly itemising and declaring valuable contents, particularly during building works and renovations, could protect you against losses and potentially costly, complex insurance claim disputes in the UK. However, it is probably advisable to remove such items from the property during works and find a suitable secure storage location.
Couple Sues Zurich Over Fire Damage Claim Refusal: What Can You Learn?
This real-life situation isn’t just about the Bellhouses; it’s a valuable lesson for all property owners planning significant improvements. Always inform your insurer about major renovations or extensions. They may be prepared to accept the additional risk whilst the works are completed. Most will have a maximum contract value for the renovations that they can allow. If they do continue to provide cover for your property, it is likely that they will impose certain modifications to the policy terms during the contract period. This is because the existing structure and the new works present a higher risk of fire, theft, and damage during the construction process.
If they decline to cover the works or the terms they apply are not acceptable to you, securing a comprehensive homeowners contract works insurance (also known as home renovation cover) before any construction begins is a sensible alternative. Doing so could avoid a painful scenario where you find yourself either uninsured for significant losses or deep in an insurance dispute, potentially suing your insurance provider.
Key Differences on Home Owners Contract Works Cover vs Contractors Insurance Cover
Contractors and tradesmen should have insurance covering a broad suite of risks. Guarding against multiple liabilities and risks to equipment will often be their priority. They may also have obtained a policy that includes contract works cover. However, it is unlikely to offer as comprehensive protection for the property owner as a dedicated Home Owners Contract Works policy (a.k.a. Home Owners renovation cover).
Property owners should not rely solely on the contractor’s insurance, as it may not cover the full extent of potential damage to their property. It is recommended that property owners arrange suitable cover during the renovation work.
Important Points
- Property owners’ existing policies may exclude or restrict coverage during renovations, leaving them vulnerable if something goes wrong.
- Home Owners’ Contract Works is focused on protecting the homeowner’s property, while a contractor’s contract works insurance will be focused on protecting the contractor’s exposure.
- Home Owners’ Contract Works typically provides broader coverage for the existing structure and new works during renovations, whilst a construction firm or tradesman might have insurance that focuses more on the contractor’s potential liability for losses and cover for their equipment.
- Homeowners’ renovation insurance can respond regardless of fault, whilst a construction firm’s contract works insurance policy may require the contractor to be proven negligent for a claim to be successful.
Both types of insurance are important for a renovation project, but they serve different purposes. Property owners should ensure they have adequate renovation insurance to protect their property, regardless of whether the contractor states they have suitable insurance. Home Owners Contract Works insurance will add cost to the project, but it can be a fraction of the overall renovation budget and the protection will provide valuable peace of mind.
Stay Protected During Property Work: Your Next Steps
- Inform your insurer: Always be transparent about building works to avoid invalidating your policy.
- Get specific coverage: Invest in contract works insurance tailored to your project.
- Protect your valuables: Insure luxury items like watches or jewellery are safeguarded.
For additional peace of mind, familiarising yourself with common property insurance claim pitfalls is wise. Reliable external resources like Citizens Advice and MoneyHelper provide clear guidance on managing your policies and dealing with disputes.
After all, knowing your risks and ensuring you’re covered can save you from becoming the next cautionary tale in insurance litigation.
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