Clients renovating their home? Don't let them make this common mistake

Imagine the scene. Your client is building an extension. The kids are growing up or the mother-in-law is moving in, and they need a bit more space in their dream home. But they simply don’t think about telling their insurance company about their plans. Depending on the value of the works they are having done, they may be exceeding the limits of their insurance policy – which can have enormous ramifications.

Renovation generation
The past year has seen a huge spike in home improvements, large and small. We have all been trapped in our homes, and many people have moved in with family members – temporarily or permanently. With increased savings and plenty of time to consider the options, more of us are looking around our homes and imagining the renovations we would like to make.

Fully built, lived-in houses are generally safe and secure. Unfortunately, accidents are commonplace on building sites. Properties undergoing construction or renovation are also at increased risk of theft or malicious damage if they are left empty at night. Contractors may have inadequate insurance or none at all, and the risk of fire is significantly higher.

As a result, insurance companies are usually strict about the value of work they will automatically cover at a property and if your client starts works without speaking to their insurer, they might find themselves unexpectedly unprotected in the event of a claim. Unfortunately, this is a common mistake. Home insurance policies have a limit on the value of works they will automatically cover, and if your client is planning works above this limit, they must let their insurer know. The limit varies between policies – while most have a low limit, DUAL’s Home and Contents policy automatically covers up to €250,000 of works.

Contractor’s insurance
Sometimes, clients believe that a contractor’s CAR policy will cover the work, and they needn’t worry about insurance at all. Alas, this isn’t always the case. If a fire occurs, for example, the liability could potentially be divided between the client’s insurer and the contractor. In the case of a claim, if the cost of damage exceeds the insurer’s limits, the client again might find themselves not fully protected.

We have seen a number of examples of this. In one instance, a house undergoing construction works burned down. The fire brigade identified the most likely cause of the fire to be a power tool that was left plugged in and turned on over the weekend. Unfortunately, the fire damage was so complete that it was difficult to prove this with 100% certainty.

In another instance, a sub-contractor – a local handyman – caused over €1 million of accidental damage, but had no insurance and no assets. In another, the contractor caused a huge fire but went bust when the clients tried to claim. In all of these examples, the clients would have been able to claim for their loss if they had secured the correct policy.

A public service announcement
If your client is considering major changes to their home, you should advise them not to sign a contract until you have spoken to their insurer. Dream designs and exciting plans can turn to smoke overnight, which is devastating enough. But do not leave your clients uninsured in the face of disaster. If your client is planning construction work, remember to do these three things:

- Inform their insurer well before the works begin
- Ensure contractors have adequate CAR cover
- Remember to revalue your client’s home after works are completed, to avoid underinsurance later.

We are happy to accommodate our clients when they refurbish their properties. As standard, our Home and Contents policy covers up to €250,000 of works, so long as the property remains fully occupied for the duration. We can offer terms beyond this limit too. Get in touch to find out more.

Kate O’Connor is the Head of Business Development at DUAL, the world’s largest international MGA*. DUAL Private Client specialise, amongst other areas, in high net worth personal insurance in Ireland and are backed by AXA XL, a division of AXA, one of the world’s largest insurance groups. t: 01 6640001 / e:enquiry@dualgroup.ie

*based on 2019 research carried out by DUAL

DUAL Underwriting Ireland DAC (trading as DUAL Private Client) is regulated by the Central Bank of Ireland. Registered No. 633531. Registered office: 11, Fitzwilliam St. Upr., Dublin 2 DO2 YV66. Directors: Barry O’Dwyer (Managing), Ralph Snedden (British), Richard Clapham (British).

This article was first published in Irish Broker Magazine - read the PDF version.