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Self Build Insurance

INTRODUCTION
 
 
There are 3 broad procurement systems to choose from when building your new home:
 
 
1. The Main Contractor route: A Main Contractor is appointed by you to construct your entire house from start to finish.

2. The Direct Labour Route: You take the role as the Project Manager and appoint individual tradesmen for each element of the works such as ground workers, block layers, roofing carpenters, electricians, plumbers etc. ?You are also in charge of the entire procurement of the build, which includes timing and appointing tradesmen, ordering materials, organising scaffolding, etc.
 
3. The Project Management route: You appoint a Project Manager to organise the whole “direct labour” process for you. He/She will organise the appointment of the individual tradesmen, order materials, and keep the project within the time frame etc.
 
 
If you decide to go the Main Contractor route you will not necessarily need to take out SelfBuild Insurance, as the Main Contractor is responsible for insuring the project from start to completion.  The Main Contractors insurance should include for Public Liability, Employer Insurance and Contractors All Risks Insurance.  It is up to you to examine the Main Contractors Insurance policy to ensure it fully indemnifies you, and that the policy is not due to run out before the end of your build.  Alternatively, get your Insurance Broker to have a look at the Main Contractors policy to ensure you are fully indemnified.
 
 
WHAT IS SELFBUILD INSURANCE
 
Building or extending a home by the ‘Direct Labour’ or the ‘Project Management’ method makes you ultimately responsible for the site.  You are now the “Employer”.  As a self builder, you invest a lot of money into your build project and you need to make sure that your investment is safe from Start to finish.  Self build insurance was developed to provide protection to Individuals building their own homes using the ‘Direct Labour’ and ‘Project Management’ method.
 
A good Self Build Insurance should cover you for the following:
 
  • Construction Works, Material, Plant, Tools, Equipment
  • Caravans, Site Huts and Contents
  • Public & Employers Liability
  • Legal expenses
  • Personal Accident
 
 
It is important to put the self build insurance in place prior to starting the construction works, otherwise, your policy may contain certain exclusion clauses or you may not be able to get insurance.

 
TYPES OF COVER
 
 
>>All Risks on the home under construction
 
This provides property cover for the house on an all risk basis i.e. events such as fire, lightening, storm, explosion, flood, accidental damage and theft.  If required indemnity letters can be provided for mortgage or financial providers under this section.

>>Plant, equipment & materials

This provides cover for any items you may need to hire in during the course of the self build e.g. generators, cement mixers etc. It also provides cover for materials brought to site for use in the build. Cover is on an all risks basis as detailed above.  It is important to note that Insurers will not be prepared to cover items left unsecured and a reasonable amount of security protection will be required. A basic requirement would be forcible entry/exit from a locked container or similar structure.

>>Employers Liability
 
This provides cover for injury to any person who is working on the site, whether they have their own insurance or not.
 
In legal terms, an Employee can be defined as someone ‘under your direction or control’, so this can include any person working on the project, regardless of their individual status. As mentioned above, the legal definition of an employee is not dependant on someone directly engaged on a PAYE basis. The cover provided by this section should be at a level of at least €13m per incident to cover awards for compensation as well as associated legal costs

>>Public Liability

Public Liability is there to provide cover in the event that there is damage caused to a third party property on the site or if there is someone injured on the site. Such persons include, planning officials, delivery men, friends visiting the site, children accidentally roaming on the site and even people trespassing onto your site with unlawful intentions.  Cover should be sought for at least €2.6m for any one accident.

The above are the major covers provided by comprehensive self build policies but other options would include:
 
Legal Expenses cover in case you need access to legal opinion in relation to the build
 
Personal Accident cover to provide you with compensation, should you be unfortunate enough to be injured yourself during the build.
 
 
 
Top Tips when obtaining an Insurance policy
 
  • Shop around and acquire all Insurance quotes in writing.
     
  • Insurance cover levels vary significantly and the cheapest is not necessarily the best as it may exclude some of the most frequent incidents that occur on site.  Make sure you are comparing like with like.
     
  • Check if a policy can be tailored to the period of time you estimate to build your home and get agreement, in advance, on the cost if you need to extend cover.  Generally, policies are available for 12, 18 or 24 month periods.
     
  • Ask for assurances on how quickly a policy can be issued. Mortgage providers will insist on seeing a ‘Letter of Indemnity’ or ‘Notice of Interest’ from your Insurance Company to release funds for your build.
     
  • Insurance is never a substitute for having strict health & safety practices on site. While it will relieve the financial burden of accidents, it cannot undo the delays, stress and suffering that is caused by an accident on site.
     
  • Undertaking a self build does not absolve you from your obligations under Health & Safety legislation and information can be found on www.hsa.ie. You are as likely to receive a visit from a Health & Safety inspector as any Building Contractor.  It is important to note that all scaffolding and temporary gangways have to be erected by a licensed scaffolder in strict accordance with the HSA regulations and codes of practice.
     
  • Regardless of the period of insurance stated on the policy, they usually contain conditions to the effect that cover will end when you reach practical completion. These are construction policies and not designed to include your domestic belongings when you occupy the house.
     
  • Arrange a household comprehensive policy in plenty of time before you or your personal contents are due to move in.

 

To find out more on Self Building Click here

 

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