Self build insurance is essential!

Self build insurance offers a last level of protection against the many risks inherent in building your own home.

Although you will be trying to eliminate as many of these risks as possible with safety and security measures, there is always the chance something can go wrong.

If you look at the financial implications of something going wrong, the insurance costs begin to look quite reasonable.

Not only are you to protecting yourself but your lender will also want to see evidence of adequate insurance before they will release funds. There is even a legal requirement for some types of cover.

The Risks

• Injury to members of the public - Off site and visitors.

• Injury to workers.

• Injury to trespassers and kids on site without permission.

• Personal injury.

• Theft of tools and materials.

• Vandalism.

• Accidental damage.

• Defects.

• Floods.

Which Cover do You Need?

The cover you need will differ depending on the build route you are using.

If you are project managing the build then you will probably need most of the cover. If you are using a main contractor or project manager discuss with them the insurance they hold.

It could be worthwhile just taking out all the essential cover yourself, regardless of your contractors cover. You never know what might come up and this way, you can be safe in the knowledge that everything is covered.

Your cover should include the following:

Public Liability

As soon as you purchase your plot you are liable for injures to individuals on your site, whether they have permission to be on it or not. You should get this cover in place ASAP.

Once work begins, public liability will cover members of the public or passers by should an accident occur as a result of your site activity.

Employer’s Liability

If you re acting as project manager, then you are running the site and from the perspective of insurance you are the employer of any workers on that site.

Any accidents could result in your being sued. If you have a general contractor, then this should be covered by their insurance, HOWEVER, you should discuss this before work commences to ensure that the cover is in place.

Contract Works Insurance or All Risk

This covers loss related to construction activities including:

• Theft of plant and materials.

• Fire and structural damage.

• Policies usually offer a range of other options to choose from.

Again, you may not need this if you are using a main contractor but make sure their cover is adequate.

Other Options You May Need

In addition to the biggies most specific self build insurance policies will offer options for additional cover, including the following:

• Existing structure and buildings.

• Mortgage payment protection.

• Legal expenses.

• Site huts and caravans.

• Plant and equipment: owned or hired.

• Employee tools.

• Personal accident.

• Contents insurance for you temporary caravan. (You may need a separate policy). An insight into living in a caravan on site.

• Buildings and contents insurance – on completion of the build and for the remainder of the policy term.

There may be a need for further insurance if your legal advisor has uncovered any issues during the purchase. Your solicitor should advise you on this and you can discuss the options with your insurance provider.

Another type of insurance you will almost certainly need is structural defects liability insurance, commonly known as a structural or building warranty. On completion this provides 10 years of cover and is a 'must have' for mortgage lenders.

Self Builders Insurance Policies

The insurance needs for self build are unique and as with the mortgage market, the number of products tailored to their specific needs has increased with it's popularity.

Insurance requirements are not dissimilar to those of a small developer. Add to the building site insurance a number of personal insurance requirements and you’ve got something unique.

Self build insurance providers usually offer flexibility. They can cover all the bases as well as let you choose specific cover and time frames. They can even roll the policy into standard building and contents insurance as and when you complete your build.

Self Build Insurance Providers

As we’ve mentioned there are a several self build insurance providers in the market.

The main ones are:

• DMS Services Ltd.

• Self Build Zone (Sennocke IIS ltd).

• Project Builder.

• Buildstore - Buildcare (Zurich).

• Belmont International Ltd (Self-Builder.com).

They normally charge a single premium for a fixed term or until the property is completed - Whichever occurs first.

Have a look through and make sure you read the full terms and conditions when comparing them. Inclusions, exclusions and excesses will differ and could make a real difference to your choice.

Return to our Money section for information on self build mortgages and other financial matters.