Building your own home involves a lot of time, effort and cash. It's not for the fainthearted and it's prudent to prepare in case something goes wrong. For example, what if someone was injured on site, a storm damaged the construction, or valuable tools were stolen? It doesn't take much to throw the project off course and put you out of pocket. It is therefore essential to arrange appropriate self build home insurance cover.
Insuring the building site
A number of specialist insurers offer cover for self-build projects. Site insurance, sometimes called contract works insurance, is most akin to a standard buildings and contents policy. It covers a range of risks including flood, storm and fire and usually includes any temporary buildings on the site, such as huts and caravans, as well as the property under construction. It's also worth checking that site insurance includes any professional fees, site clearance and debris removal in the event of a claim.
Self build house insurance differs from a standard policy because it typically runs for 18 months rather than one year
Most self build insurance policies pay out if thieves break into the site and steal any plant tools or equipment, either your own or hired. Site insurance will also normally cover any tools and personal effects belonging to employees, though the limit is usually about £2,000. Of course, it's up to you to keep the site locked when not in use and most insurers will insist on a high level of security to deter potential thieves.
You might also be required to mark valuable items with a security pen to help identification and recovery if they are stolen.
If you are building your own home, you have to think about protecting more than the site and its contents. You also have to consider your liabilities, both to members of the public and to your employees.
Let's say someone, even a trespasser, came onto the site and injured themselves. Or maybe a falling branch damaged a neighbour's property. As the site owner, you could be held legally responsible, which means you could end up with a big compensation bill. A self build insurance policy will typically cover public liability up to £5m, and you should make sure it is in place as soon as you buy the plot of land.
You also have a legal responsibility to any employees and could be liable to pay compensation, plus any costs, if an employee suffered an injury or contracted a disease as a result of working on the site. Check the limits on your policy but most will include employer's liability up to £10m. Remember, this is compulsory!
Self build house insurance differs from a standard policy because it typically runs for 18 months rather than one year. There is also normally the option to extend the cover if the project is not completed on schedule.
Consider buying a warranty
It's a good idea to consider buying a structural home warranty if you are building your own home. In fact, many lenders insist that a 10-year warranty is in place before they will consider a self-build mortgage. A warranty can give you peace of mind because it would pay for any repairs if you were to discover a serious defect within 10 years. The warranty would also normally include any legal fees if you were to sue a designer or contractor for negligence.
Damage to surrounding property
It's worth mentioning JCT Clause 21.2.1 insurance. It's quite a complex area but the policy basically covers any damage to surrounding property caused by collapse, subsidence, heave, vibration, weakening or removal of support, or lowering of ground water as a result of the works on your self-build project. You do not necessarily need JCT Clause 21.2.1 insurance: it depends on the nature of the works and the geology of the site. But your engineer or surveyor should be able to offer advice.
Find the right cover for you
You shouldn't stint on self build insurance – it's vital – but neither should you pay over the odds for cover – and it's easy to compare self build home insurance polices and premiums with MoneySuperMarket's free, independent comparison service. The leading insurers are listed on our website so that you can be sure to get the best deal at the best price.
In general non-standard insurers will not cover self builds that are ground up constructions - this would require a specialist insurer. However, most will cover self builds once they have been signed off by a builder and appropriate planning permission has been obtained.