Guide to Self Build Insurance

There are many risks involved with building your own property and in order to ensure you are protected fully self build insurance is essential. Self build insurance is there, as part of non-standard construction insurance, to protect yourself against something going wrong, but it is also something that your lender will insist on seeing evidence of before releasing their funds.

A self build involves a lot of time and dedication and it is worth bearing in mind that it won’t always take much for the whole thing to go off course and cost way more than you ever intended. Self build insurance will ensure that some of the most unexpected additional costs and risks are covered.

Advice on self build insurance

Self build insurance needs to be provided by a specialist insurance broker who can advise you on exactly what cover you need. There are many common assumptions with self build insurance, such as thinking that your contractor has Public Liability Insurance so you don’t need it.

This is not the case, it covers their liability for negligence but does not include when your property can be damaged by fire, floods, storms or theft or if a member of the public is injured on site. You should make sure you have Public Liability Insurance in place right from the point where you purchase the land and also insure any existing structure on site even before any work begins.

Likewise a site owner can often think that when a contractor has ‘All Risks Cover’ then they are ok. This again is not always the case as there would need to be a written contract stating they are responsible for the entire project to the point of completion and their insurance would need to exceed the full value of the rebuild cost.

In some cases a contractor will also only work on the shell of the building and hand over when it comes to the first fix stage, from this point on you would also therefore not be covered.

What are the risks from self builds?

Risks that you are subject to from building your own property could include vandalism, theft of tools and materials, injury to your workers or yourself, injury to members of the public or trespassers, floods and property damage. Generally a self build insurance policy will run for 18 months to two years rather than the standard one year policy, which can also be extended where needed as many self build projects do not run to schedule.

Components of site build insurance

Self build insurance will include what is called ‘Contract Works Insurance’ or ‘Site Insurance’, which covers a range of standard risks including flood, storm, fire and theft as well as any temporary buildings that may be needed such as caravans on site whilst the property is being built.

As a self builder you will be asked to estimate the Professional Reinstatement Cost of the property, which means estimating the cost to build the home again should any damage occur. This cost is commonly underestimated potentially leaving you out of pocket as many site owners forget to make sure that this cost includes professional fees, site clearance and debris removal.

As the site owner you will have a great deal of responsibility and liability on your shoulders when working on a self build project. There are liabilities to the public as well as your employees that work with you or for you on site. Whilst you may not be planning for a member of the public to visit the site, you cannot rule out the possibility of trespassers being injured or neighbouring properties or inhabitants being damaged or injured.

Self build insurance policies should include public liability up to at least £5m as you will be legally responsible for damage or injury caused on site even if the victim was caught thieving!

Employers liability insurance is another important part of self build insurance, it is compulsory for any employer to have and will cover any compensation or costs attributed to injury or conditions developing from work they have done for you. Potentially these claims can run into thousands if not millions of pounds so cover should be provided up to £10m.

If your new build is close to surrounding properties then it is also wise to consider JCT Clause 21.2.1 insurance, which will cover any damage to surrounding property during your build. This will include anything that is damaged by collapse, subsidence, heave, vibration, weakening or removal of support, or lowering of ground water. This is not always something that will be required but advice on individual cases will help you to consider if this is something you might need.