Conversion At Home: What Insurance Do I Need?

No matter whether you live in a new building or in an old house: If you are planning structural changes, you should protect yourself against unforeseen events. For example, with a builder’s liability insurance that covers accidents during the construction phase. If you save money at the wrong end, you may end up with unplanned costs. We have put together the most important conversion insurance policies for you so that you can master your conversion in the best possible way.

Modernising or renovating your house can increase its value – and thus the sum insured. If you do not adjust the amount of your homeowner’s insurance, this will have consequences: In the event of a claim, your property may be underinsured and you are not entitled to full settlement of the costs. You should therefore inform your insurance company immediately about the planned construction measures.

What does “underinsurance” mean in the case of homeowners insurance?

A house is underinsured if its value is greater than the sum insured. If, for example, a house insured for 200,000 GBP burns down, the maximum amount paid out in the event of damage is that amount, even if the house is currently worth 300,000 GBP. Even with a damage of only 50,000 GBP, the homeowner would suffer a painful loss. If only two thirds of the house value were insured, only two thirds of the damage will be paid, instead of 50,000, only 33,333 GBP.

How can the building value be determined?

Your insurer will waive underinsurance and pay the full costs without deductions in the event of damage if the building value was determined using one of the following methods:

1) Valuation based on the size and features of the building: a simple and reliable method. You will need to fill in a questionnaire with your insurance company. The basis for the calculation is the location and living space of the building. Surcharges or discounts are calculated depending on the equipment.

2) Conversion of the building’s new value: The insurer converts the building price of your house to current conditions using a special procedure. This method can be inaccurate if, for example, you do not take into account personal contributions or discounts.

3) Appraisal by an expert: An expert determines the current market value and also the current construction costs. This method is extremely expensive but often the most accurate.

In addition, you are obliged to inform your insurance company of any risk-increasing circumstances. These include conversion and renovation measures as well as vacancies. If you fail to do so, the insurer may also reduce or refuse benefits in the event of a claim.

An increase in risk exists when…

  • a circumstance changes which the insurer asked for in the context of the pre-contractual information gathering
  • a building is not used in whole or in major parts
  • construction measures are carried out in the course of which the roof is removed in whole or in part or which render the building predominantly unusable
  • a new business or a business of a different type from that at the time of conclusion of the contract is started in the insurance building
  • the insurance building is placed under a preservation order after conclusion of the insurance contract

Builder’s liability insurance: for accidents during the construction phase

As a building owner you have rights and obligations. One of the essential duties is to secure the construction site appropriately. This can be done, for example, by erecting a site fence or attaching warning signs. If you do not take all securing points into account, you as the builder-owner are liable in the event of damage. This also applies if all work is carried out by specialist companies.

Personal liability insurance offers only limited protection in this case: Under certain circumstances, smaller construction projects relating to modernisation, renovation or refurbishment may be included. In general, it is advisable to carefully check the insurance conditions of an existing liability insurance policy before starting the planned work and, if necessary, make an enquiry to the insurance company. If smaller construction measures are not covered by the insurance conditions of the private liability insurance, no subsequent extension of cover is possible. Only a builder’s liability insurance will cover you in such cases.

 Construction assistant insurance: for friends and family

Do you have talented craftsmen and plumbers in your circle of friends? These helpers come in handy when building your own home. Whether free of charge or for a fee, whether for short or long term use: As a builder-owner you are liable for every person who helps you.

As a builder-owner, you are obliged to register all helpers with the Employer’s Liability Insurance Association for Construction. Failure to do so may result in a maximum fine of 2,500 GBP. However, the Employer’s Liability Insurance Association only offers basic protection in the event of accidents. Certain claims, such as the assumption of payment due to loss of earnings, are not covered by it and are your responsibility in the event of a claim. However, do not forget yourself or your partner and make sure you have private accident insurance. Because as a builder-owner neither you nor your partner are covered by the construction workers’ accident insurance.

 Building performance insurance: against damage during the construction phase

Thieves and vandals are unfortunately not uncommon on a construction site. The construction insurance covers damages caused by extraordinary weather conditions or unforeseen events such as vandalism, theft of already installed construction products or negligence of the construction workers. If already installed ones are dismantled, if the boiler disappears forever or if doors are kicked in, then the construction damage insurance comes into effect. Regardless of whether the damage is at the expense of the building owner or the respective building contractor:  the insurance company steps in. The companies and tradesmen involved in the construction are therefore also insured.

The insurance checklist for your conversion:

  • Notify your homeowner’s insurance company of the renovations.
  • Report temporary vacancies, scaffolding on the house façade and changes to the living space to your home contents insurance without delay.
  • Check your private liability insurance: Does it include cover for minor renovation measures?
  • For larger renovation projects: Take out builder’s liability insurance.
  • For the protection of your building: Take out a building performance insurance.
  • Register all construction assistants with BG BAU so that accident insurance for construction assistants can be taken out for them.
  • If not yet available: Arrange for private accident insurance. As a builder-owner, you and your partner are not covered by construction worker accident insurance.

Caution is better than leniency

The available insurance policies are voluntary for building owners. But even without a legal obligation, you should not forego the necessary protection in your own interest. A building project is not only associated with high costs until the final completion and usability of the property, but also carries a high risk – even with small conversions. During the construction phase, a large number of events can threaten completion or, in the worst case, prematurely terminate construction.

So that you can cope with the upcoming costs for conversion and insurance in addition to your everyday expenses, Credit company is a fair partner at your side: with a loan you can easily bring your house up to date. You determine your monthly credit instalments yourself with the Credit company credit calculator. With Credit company you can experience the relaxed way of financing – transparently and without hidden costs.

A loan amount of 1,000 to 75,000 GBP provides the financial opportunity to fulfil every modernisation dream. Complete your Credit company conveniently online and benefit from our fast credit decision.