martynj.com - things I have learnt

Self-Build: Insuring a House prior to Demolition (Property Owner's Liability)

We're now the proud owners of a tatty '60s bungalow for demolition followed by self-build project.

Among the usual "new house" tasks - meter readings, sorting council tax, etc - it should be insured, even though it'll be reduced to rubble in the future.

On the face of it, it sounds unnecessary to insure a for-demolition property since:
- there's no mortgage secured on the property (if there was, the bank would be pretty unhappy about demolishing it!)
- if it falls down or is vandalised, it doesn't really matter,
but it seems that "fire, lightning and property owner's liability" cover is still advisable.

That is, if it
- catches fire and causes damage to neighbouring properties, or
- the fire brigade flood surrounding ground while putting out your fire, or
- some poor unfortunate burglar was to hurt themselves while trespassing on the property and sue you for damages,
then the insurer will cover the cost. (That said, there is no legal requirement that it has to be insured.)

Normal home insurers don't do fire, lightning and property owner's liability insurance - it's a rather specialist request. I called a couple of mainstream insurers (Home Protect and Direct Line), and was advised to speak to BIBA, the British Insurance Brokers Association (biba.org.uk). BIBA helpfully took the details of our situation and called several specialist brokers for us.

Of the 3 brokers that BIBA thought might cover our self-build needs, only 1 would do fire/lightning and property owner's liability for our situation (not living in the bungalow prior to demolition). That was Sky Insurance (a combined broker and underwriter, skyinsurance.co.uk/), using specialist household insurer Canopius of Lloyds.

For a 3-bed bungalow with an estimated re-build cost of £300K (way too high in my opinion), the premium was ~£350 for 12 months (no refund for partial year). That seems very high considering our normal 3-bed house buildings insurance (which includes re-build if destroyed) is less than that. The broker explained that it's expensive because a) it's a specialist product, and b) the property will be empty, so more likely to be vandalised and require a claim. So be it.

Tagged: self-build

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