A forest of scaffolding on the façade, a skip in the courtyard, unfamiliar workers in the stairwell: renovation is a big moment in a building's life – and, in insurance terms, its most eventful period. The risk picture is rearranged for months: fire and water risk rise, the scaffolding appears as a route for intruders, and the big question comes up – how much can the existing policy carry, and when is separate erection-all-risks cover needed?
- The existing condominium policy is written for normal operation: restrictions typically apply to damage occurring during substantial rebuilding or refurbishment works.
- For larger works the right product is contractors' all risks (CAR) type cover – usually taken out by the contractor, but it is in the building's interest to check it.
- The contractor's liability insurance is the building's first line of defence: ask for it and check it before signing the contract.
What does the existing policy say about renovation?
Condominium policy terms typically address the period of construction and installation works: minor maintenance fits within normal operation, while substantial works may bring restrictions or exclusions – and a duty to notify. So the first step is not to take out new insurance but to read the existing policy and inform the insurer about the planned work: what is covered while the works run, what is not, and what the insurer requires. A missed notification is the worst combination: if damage occurs, cover can be called into question. The guide to reading policy terms helps here.
When is separate construction cover needed?
High-volume works – a new roof, adding a storey, a full façade refurbishment, replacing the risers – call for their own product: contractors' all risks (CAR type) insurance, which covers the construction work itself, the materials and the damage occurring while the works run. This is usually taken out by the contractor; the building's job is to write the requirement into the works contract and to actually see the policy. The detailed product guide belongs to epites.biz (in Hungarian) – what matters here is the condominium's point of view: the building should not fall between two stools, assuming that “the contractor's insurance will take care of it” when no such policy exists.
The contractor's liability: ask, see, record
Renovation losses are typically caused by the contractor, so it is primarily their liability insurance that covers them – but the injured party can also bring a claim against the building, so three things matter at once: the liability and insurance requirement set out in the works contract, checking the contractor's policy, and the building's own liability cover with a realistic limit. That is what the contractor's liability insurance is for – so ask for the certificate before signing, and it is worth measuring the indemnity limit against the scale of the works. Meanwhile the building's own liability cover continues on the building's side: the stretch of pavement under the scaffolding and the use of public space also fall within the building's sphere of responsibility – together the two give the full picture.
After the works: the value has risen – so should the sum insured
After a successful renovation one insurance task remains, and it is the most important: carrying the new value through. A renewed roof, new building systems and an insulated façade raise the building's rebuild value – if the sum insured stays where it was, the building leaves its freshest investment uncovered and drifts towards underinsurance. The procedure: raising the sum insured mid-term – and the renovation paperwork goes into the archive: at the next quote request it will be the building's best argument.
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