Insurance for Home Renovations and Extensions: What You Need and What Your Contractor Should Have

Before any contractor starts work on your property, you should request and verify copies of their insurance certificates. A reputable principal contractor should carry all three of the following:

**1. Public Liability Insurance (PLI)**: Covers third-party claims for property damage or personal injury caused by the contractor's operations. For example: a contractor accidentally damages a neighbour's property; a member of the public is injured by falling debris from the site; a contractor's vehicle damages the client's garden fence.

**Minimum acceptable level**: £2 million public liability for domestic projects; £5 million or £10 million for larger or commercial projects. Most reputable contractors carry £5 million as a minimum.

**What to check**: The certificate must be current, the insured entity must match the contractor trading name you are contracting with, and the description of activities covered must include your type of work (construction, structural works, etc.).

**2. Employer's Liability Insurance (ELI)**: Legally required for any employer — covers claims from the contractor's own employees injured during works. If the contractor employs even one member of staff (including subcontractors treated as employees for the purposes of the work), ELI is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969.

**Minimum legal requirement**: £5 million — but most insurers provide £10 million as standard.

**Note**: If a contractor uses self-employed subcontractors, those subcontractors should carry their own PLI and ELI (if they themselves employ staff). Ask your principal contractor whether all subcontractors are insured.

**3. Contract Works Insurance (also called Contractor's All Risk — CAR)**: Covers the works themselves during construction — against damage by fire, flood, theft, vandalism, or accidental damage. Without CAR insurance, if the partially completed extension burns down, the contractor may have no insurance to cover the cost of rebuilding the work already done.

**What to check**: CAR must be project-specific or cover the contract value. For a £100,000 extension, the CAR policy must be capable of paying £100,000 to rebuild. Some general PLI policies include a limited CAR element — confirm the level of cover is adequate for your project value.

**Professional Indemnity Insurance (PI)**: Required for the architect, structural engineer, and any other professional advisor on the project — not typically carried by a contractor unless the contractor is providing design services (design and build). PI covers negligent design or professional advice that results in financial loss. Check that your architect and structural engineer carry current PI, and ask for the level of cover (minimum £500,000; £1 million is more appropriate for larger projects).

• **Notify your buildings insurer before the project starts**:
• This is critical and commonly skipped. Your standard buildings insurance policy includes a clause requiring you to notify the insurer of 'material changes' to the risk — and a major renovation or extension almost certainly constitutes a material change. If you do not notify your insurer:
• •Your buildings insurance may be void during the works
• •A fire, flood, or structural collapse during construction would not be covered
• •Damage to the existing structure caused by the construction works may not be covered

Contact your insurer, describe the project (extension, loft conversion, full refurbishment), approximate value, and start and end date. The insurer will either confirm your existing cover continues with no change, increase your premium to reflect the increased risk, or (for very large projects) require you to take out a specialist policy.

**Unoccupied property insurance**: If the renovation makes the property uninhabitable and you move out during the works, most standard buildings insurance policies have a clause that voids cover after 30–60 days of unoccupancy. If the project is long (3+ months) and you are not living in the property, arrange specialist renovation insurance or unoccupied property insurance for the duration.

• **Specialist renovation insurance**:
• For major projects (£50,000+, or projects that make the property uninhabitable), a specialist renovation insurance policy may be more appropriate than relying on existing buildings insurance plus contractor insurances. Specialist policies cover:
• •The existing structure during works
• •The works themselves (as the contract works element)
• •Public liability for your own activities as an employer if you are acting as your own project manager and engaging trades directly
• •Loss of rent if you are a landlord renovating between tenancies

Providers include specialist insurers such as Self-Build Zone, Protek, and BuildStore. Costs are typically 0.3–0.8% of the rebuild cost.

A structural warranty (also called a latent defect warranty or new homes warranty) is a long-term insurance policy that covers structural defects that appear after construction is complete — typically for 10 years from practical completion.

• **Why latent defects matter**:
• Most significant construction defects do not appear immediately after completion — they develop over months or years as the building settles, materials weather, and hidden defects become apparent. Examples:
• •Foundation movement or settlement that causes cracking (may appear 2–5 years after construction)
• •Defective waterproofing to a flat roof or basement that fails after 3–5 years
• •Structural steelwork incorrectly specified or installed, causing deflection over time
• •Inadequate insulation to an extension that only becomes apparent when the first Building Control inspection certificate is reviewed against actual performance

• **When a structural warranty is required**:
• •Loft conversions with a new structural element: many mortgage lenders require a 10-year structural warranty for loft conversions before lending against the property
• •Extensions with new structural elements
• •New-build dwellings and annexes: almost all mortgage lenders require a 10-year structural warranty (NHBC Buildmark, Premier Guarantee, LABC Warranty, Build-Zone, Protek, etc.) for new builds
• •Self-build projects

**If your contractor does not provide one**: If your contractor does not offer a structural warranty (many smaller domestic contractors do not), you can arrange an independent structural warranty through a specialist insurer. The inspector will inspect the works at key stages (foundation, structural frame, waterproofing) and issue the warranty on completion. Cost: typically £1,000–£5,000 depending on project value.

**Contractor guarantee vs warranty**: A contractor's own written guarantee (e.g., '10-year guarantee on all structural works') is only as good as the contractor's continued existence. If the contractor ceases trading, the guarantee is worthless. A properly underwritten structural warranty from an insurer survives the contractor's insolvency — which is why mortgage lenders require it.

**Building Control certificate is not a warranty**: A Building Regulations completion certificate from Building Control confirms that the works were inspected and appeared to comply with the regulations at the time of inspection — it is not a warranty against defects. Building Control cannot be sued if a latent defect later appears that the inspector did not identify.