Home extensions – do they affect your home insurance?

If you’re thinking about extending your home, you’re not alone. In 2023, almost 300,000 homes in England were granted planning permission by district level planning authorities, according to the Department for Levelling Up, Housing and Communities.

For many of you, extending a property is the best solution to get that sought-after extra space.

Before you begin, however, you need to be aware that there could be implications for your home insurance. Extending your property or adding outbuildings could mean that your cover is limited at certain times during the length of the works or is no longer suitable.

There are four things to consider: 

Do you need to notify your home insurance provider if you are undertaking significant work at your property?

1. This all depends on the policy. At Paymentshield, for example, we don’t require new or existing customers to notify us about whether your property is undergoing renovation or extension works. This means that we cover properties during the work, providing our eligibility criteria continues to be met (for example, the property will continue to be occupied).
   
   Many other standard home insurance policies will require that you notify the insurer. The insurer will then determine if cover can continue or whether additional, specialist cover is required, and any impact on price. It’s important that you check the terms and conditions of your policy and the information you have provided thoroughly to determine if any planned works need to be disclosed. If you don’t do this, you could risk a claim being declined. 

    

2. Is the property going to be unoccupied while work takes place?
   
   If you move out during renovation work and the house is left empty, this could impact a claim.
   
   For example, Paymentshield home insurance policies have an unoccupancy period of 60 days. If you are looking to take out insurance for a property that will be unoccupied for over 60 days from the policy’s start date, then you would not be eligible to buy a Paymentshield policy, and you should look at obtaining a specialist policy. A financial adviser would be able to help you with this.
   
   If you are an existing Paymentshield policyholder and you leave your property unoccupied for more than 60 days, then certain exclusions will apply until you move back in. For example, loss or damage caused by escape of water or oil is excluded, as is theft, and accidental damage to buildings and contents.
   
   Different insurance policies are likely to have a different definition of ‘unoccupancy’ with differing limitations and exclusions, so it’s really important that you check your policy if you are planning to temporarily move out. You’ll be able to source a specialist policy if needed. You don’t want to get caught out if you need to make a claim during a period of unoccupancy.
   
   
   
3. Have you added or removed a bathroom?
   
   If an extension includes a new bathroom, wet room or toilet, it’s vital that you inform your insurance provider as it may change your property’s risk profile.
   
   Every year, home insurers typically pay out more for damage caused by leaking or burst pipes than any other claim type. More bathrooms (and more pipework) increase the chance of damage occurring and needing to make a claim. So, it’s vital the insurer is aware and that you are paying the right price for your situation – meaning no problems if you do need to claim.
   
   
   
4. Will it cost more to rebuild?
   
   Has an extension significantly increased the square footage of your property? If yes, it may cost more to rebuild if the property is damaged beyond repair.
   
   This is where it gets slightly complicated. If your home insurance has what is called a “blanket sum insured”, then you should check that the total limit will provide enough cover after an extension or renovation work on a property.
   
   The alternative is a “sum insured” policy, where you will have selected the specific cost of rebuilding your property. In this situation, you will need to check your policy documentation to ensure the buildings sum insured remains accurate, and possibly update it to avoid the risk of underinsurance.
   
   If you are unsure of what you have in place and if it needs updating, speak to a financial adviser who will be able to help.
   
   It’s also worth checking that your contents cover is still appropriate. Has that extra space resulted in you acquiring more furniture and other items that could mean your contents cover needs increasing?
   
   

Making sure that your home and belongings are adequately protected during and after extension or renovation works is not necessarily straightforward. Advisers are really well placed to help you navigate that, so if in doubt, speak to one!  After all, when you’ve invested in enhancing your home, you want to make sure it’s properly protected.