Insuring your Self-Build House
Inspired by Grand Designs, many of us aspire to build our home. Reportedly, more than half (53%) of Britons would consider building their own abode. Self builds allow us to construct a home according to our exact specifications and wants, no matter how unique they are. And self-building, even with land, materials, and labour, can be cheaper than purchasing a completed house in some regions.
You’ll need a specialised home insurance policy to insure your home as it’s being built, however. A standard buildings insurance policy won’t cover work sites and eventualities like the injury of a contractor or theft of valuable tools. Self-build insurance can cover your future home while it’s under construction.
In this guide:
- What is self-build insurance?
- What does self-build insurance cover?
- How do you insure your self-build home once it’s completed?
Self-build insurance generally refers to the policies taken out for residential properties under construction. It’s similar to standard buildings insurance, but it also covers the unique risks and legal responsibilities associated with an active building site. It’s also called contract works insurance.
You may also need contract works insurance for a property that is undergoing extensive renovation or being extended. In fact, any major structural works will invalidate existing buildings and contents policies. And if the property is unoccupied during these works, standard policies won’t be valid.
Unlike standard buildings and contents insurance, which last a year, self-building insurance typically lasts 18 months, which should be long enough for your project to be completed. However, you’ll often be able to extend the policies if the project isn’t finished on time.
Once your house is finished, you can get a typical home insurance policy for it with building and contents cover. But you may want to get a structural home warranty for the house to cover any defects in the build that arise within the first 10 years. Some mortgage lenders will require these warranties before they will lend for self-builds.
If your self-build home is of non-standard construction, you’ll need to find a specialist policy for it when it’s completed.
Self-build insurance typically provides the following cover:
- Damage from Fires, Storms, Floods, and Other Natural Disasters: this includes the in-progress building and any temporary buildings on the site, including caravans. Building sites, as they’re not completed and fitted with windows, roofs, and fire precautions, are more likely to sustain severe damage in disasters, potentially costing you thousands of pounds and delaying the project.
- Theft: inclusive of building materials and tools, whether hired or owned by you. Insurers will require you secure the property as well as possible when it’s not in use. These policies also generally include some cover for the tools and personal possessions of contractors and employers, although usually with a limit of £2,000.
- Employers’ Liability: you’re legally required to have liability insurance for employees, and that includes anyone working on the building site for your home. Employers’ liability insurance will cover you for compensation and legal costs if a contractor is injured or killed on your work site. Look for policies with liability cover of up to £10 million.
- Public Liability: you’re also legally responsible for injuries and deaths sustained by third parties and members of the public on your building site or even unbuilt land you own, even if they’re illegally trespassing. Public liability insurance can cover you for these eventualities. Look for cover of up to £5 million.
- JCT Clause 21.2.1 Insurance: under the Joints Contract Tribunal, you can also be held responsible for damage to surrounding properties caused by collapse, subsidence, heave, vibration, removal of support, or lowering of groundwater caused by your self-build project. You won’t necessarily need this cover. It will depend on the geology of the site and the type of works being undertaken. Your engineer or surveyor will be able to advise you about whether it’s necessary or not.
If you’re using professional builders and contractors, they should have their own insurance. But these policies will cover their liability and possessions and not yours, so you’ll need to find individual cover from a self-build insurance policy.
Around 12,000 self-build homes are completed in the UK each year, and their owners are then tasked with finding insurance for them.
In many cases, you’ll be able to get standard home insurance policies (buildings and contents) for your self-build, provided it has been signed off by a builder and has appropriate planning permission. These policies will cover you for the structure of the property, if damage is sustained in disasters and accidents, and the possessions you keep inside. But they won’t cover you for damage arising from structural defects or faulty building works.
To protect yourself from those eventualities, you might want to consider a structural home warranty. These last 10 years and cover you for costs incurred if a structural defect is found in the home, including the cost of pursuing contractors for negligence. Many mortgage lenders will require these policies as a condition of their loan for self-building properties.
If your self-build home is of non-standard construction, you’ll also need to get a specialised insurance policy for it when it’s completed. Nearly any home that isn’t made of standard construction materials - brick or stone with a tile or slate roof - will be considered non-standard. When you compare home insurance policies, you may need to find a specialist company for these non-standard builds. Some major home insurance providers lack experience in covering non-standard homes and may refuse you coverage or charge you very high premiums for it.