UK home improvement fever leaves up to one in three insurance policies invalid
Nine in ten (90%) homeowners have renovated their homes over the last five years and almost six in ten (58%) of these have carried out extension work such as loft conversions, new garages or extra bathrooms
But more than half (52%) of those who have carried out the extension work have not informed their insurer – potentially leaving up to one in three consumers with an invalid insurance policy
With the average homeowner forking out £15,000 on home improvements, Uswitch.com urges consumers to check they are protected if things go wrong.
It’s official: when it comes to our homes, we are a nation of ‘improvers, not movers’. In a bid to avoid the hassle and cost of moving, nine in ten homeowners (90%) have renovated their property over the last five years, with almost six in ten (58%) carrying out extension work such as loft conversions, new garages or extra bathrooms, according to new research by Uswitch.com, the independent price comparison and switching service. But the home improvements may leave a bitter aftertaste, with almost one third (30%) of consumers having insurance policies at risk of being invalid because they have failed to notify their home insurer about the work they have carried out.
With one in ten (12%) homeowners forced to scale-up their property as they can’t afford to move, many are shelling out an average of £15,000 sprucing up their homes. But most buildings insurance policies are based on the structure of the house as it stands when the policy is taken out – so adding a new room or knocking through a load-bearing wall could significantly affect the terms of the cover. Many policies could become invalid when the house is significantly altered, such as after an extension, a loft or garage conversion or even adding a new bathroom. Despite this, only 17% of homeowners check their insurance policy and contact their provider before work begins.
The research also reveals that consumers are failing to adequately protect their homes when the work is actually being carried out. Four in ten (43%) did not take steps to arrange extra cover for accidental damage to possessions or the increased security risk of open walls or removing doors and windows. More worryingly, half of home improvers (49%) failed to check whether their tradesman was certified, leaving themselves open to being short-changed. And seven in ten (71%) prefer to pay contractors in cash whenever possible – but with no paper trail, homeowners will be left exposed if the job is not completed as promised.
Michael Ossei, personal finance expert at Uswitch.com says: “We are a nation gripped by extension fever, with many people deciding to create more space in their existing home rather than move. But, with all the emotional and financial challenges of building work, home insurance is often the last thing on your mind. It’s absolutely vital to get in touch with your insurer before you start on any home improvement project to see how it will affect your policy.
“If you are extending your home you are likely to be increasing the rebuild cost – so you will need to make sure this is updated with your insurer. You might need to buy specialist insurance if your home has been built in an unusual way – such as if it has timber frames or another non-standard feature. Plus, if any external windows, doors or walls are removed during building work, you will be more vulnerable to burglaries, so you also need to make sure you are covered for this.
“It is also important to make sure the builders have public liability insurance to cover any accidental damage that happens during the work. With almost half of homeowners borrowing money in order to fund their building projects, the last thing you want is to get into extra debt if something goes wrong.”
FOR MORE INFORMATION
Charlotte Nunes
Phone: 020 7148 4664
Email: charlotte.nunes@uswitch.com
Twitter: @uswitchPR
Notes to editors
Research carried out online with the Uswitch.com Consumer Opinion Panel in August 2013 amongst a sample of 1,330 GB adults 1. When asked ‘Have you made home improvements to your property in the last five years?’ 90% said ‘Yes’. When asked ‘What changes did you make to your property?’ 58% of people carried out extension works which also includes adding a new room (bathroom), loft conversion or garage. 2. 58% carried out extension works which also includes adding a new room (bathroom), loft conversion or garage. Of these 52% did not inform their insurer of the work carried out which means that potentially one in three policies could be invalid. This is based on the assumption that each person has one home insurance policy. 3. When asked ‘How much did these home improvements cost in total?’ £14,658 was the average amount. 4. When asked why people carried out home improvement, 12% said ‘because we can’t afford to move house and upsize.’ 5. When asked ‘When did you inform your insurance provider of the changes you made?’ 17% said they informed their insurance provider of these plans before the work started (this was calculated for the following jobs - extensions works, adding an additional bathroom, loft conversion, garage conversion). 6. When asked ‘Did you take into account the following factors which could have potentially impacted your insurance when you undertook this work?’ 43% said they didn’t check to ensure they were using a certified tradesman, didn’t factor in increased security risks or cover against accidental damage. Only 51% of home improvers checked that their tradesman was certified (49% didn’t). 7. When asked ‘How did you pay for the work?’ 71% said ‘cash’. 8. When asked ‘How did you fund the work?’ 45% said they borrowed money – of these 13% took out a loan; 3% used an overdraft, 9% used a credit card; 7% borrowed money from friends and family, 13% extended the mortgage.
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