64% of UK homeowners that have made changes to their rental property did not check their insurance policy beforehand, according to a new report.
As such, a number of people are breaching the terms of their mortgage, the survey from Insurance Tailors reveals.
Breaches
In addition, 55% of homeowners did not tell their insurer when they carried out structural work on their property. This resulted in a potential bill of £2.77bn in Britain, according to the firm.
What’s more, the survey revealed that three quarters of respondents to the investigation did not enter into a formal contract with their builder or contractor. One third did not check if their builder had the relevant policy.
Andrew Boldt, managing director of Insurance Tailors, said: ‘Unfortunately, a lot of people don’t realise that their home could be uninsured if they fail to tell their insurance company that they are undertaking renovations.’[1]
‘Most insurers will remove cover completely or reduce cover during renovations which is insufficient to meet the minimum required by most mortgage contracts, so it’s important that home owners tell their insurer once they’ve decided to renovate it,’ he continued.[1]
64% of UK homeowners did not check insurance before renovating property
Worrying
Mr Boldt also noted that: ‘It’s also worrying that the majority of recipients didn’t enter into a formal contract with their builder or check that the builder had the appropriate insurance, leaving them exposed should anything go wrong. The builder would not necessarily be liable for any damage so although it’s rare for things to go wrong, it’s not worth taking a risk with your biggest asset.’[1]
When claiming for damage to a property during renovation works, the investigation revealed that Londoners had the greatest percentage of damage claims. Of those that did make a claim, over half were rejected.
Boldt notes: ‘There are many reasons for rejected claims. Most mass market insurers will automatically reject a claim if structural works were taking place at the time of the incident and they were not made aware. The most common type of claim for those with proper renovation insurance is for faulty workmanship, proving the importance of choosing quality trades people, and checking the contracts that are in place.’[1]
‘In our experience, issues around insurance for a project tend to derive from a lack of knowledge around what is a more complicated area of insurance. If people get advice from insurers and appropriate property professionals before embarking on a project, then these issues can usually be taken care of without difficulty,’ he concluded.[1]
[1] http://www.propertywire.com/news/europe/majority-uk-home-owners-undertaking-work-property-dont-check-insurance/