Building Insurance During Construction: A Guide for NW3 Homeowners

Introduction

A home under active renovation or extension is in a period of heightened risk — the building fabric is open, trades are on site, and the property may be unoccupied or only partially occupied. Insurance coverage during construction is more complex than the standard homeowner's buildings and contents insurance most people are familiar with. Understanding who is responsible for insuring what — and ensuring there are no coverage gaps — is an important responsibility for NW3 homeowners undertaking significant projects. This guide explains the insurance landscape for domestic construction projects. For related guidance, see our JCT contracts guide, PI insurance guide and warranties and LDI guide.

Types of Insurance Relevant to a Construction Project

• Contractor's All Risks (CAR) insurance: Covers physical damage to the works in progress — fire, storm, vandalism, accidental damage during construction. The policy insures the new works, materials on site, and the existing structure (if required under the building contract).
• Public Liability insurance: Covers the contractor's legal liability for injury to third parties (the public, neighbours, visitors) and damage to third party property arising from the contractor's activities on site.
• Employer's Liability insurance: Covers the contractor's legal liability for injury or illness to employees. Required by law for any contractor with employees.
• Professional Indemnity insurance: Covers the architect, structural engineer and other consultants for errors and omissions in their professional work. See our PI insurance guide.
• Homeowner's buildings insurance: Covers the existing building against standard insured risks (fire, storm, flood, theft) — but the standard policy may not cover works in progress or the risks associated with active construction.

What the JCT Contract Requires

The JCT Minor Works building contract (the standard domestic building contract) sets out the insurance responsibilities as follows:

• New build or extension (works insurance): The contractor is responsible for insuring the new works and unfixed materials against all risks for their full reinstatement value, until practical completion.
• Existing structure (if the contractor is working within and around the existing building): The homeowner is responsible for maintaining insurance on the existing structure throughout the project. This is a critical point — if fire damage destroys both the existing house and the new extension during construction, the existing house must be insured by the homeowner (their buildings insurance policy), and the new works insured by the contractor's CAR policy.
• Joint names insurance: For larger projects, the building contract may require insurance to be in the joint names of the homeowner and the contractor — ensuring both parties are protected and preventing subrogation claims between them.

Your Homeowner's Buildings Insurance During Construction

Most standard homeowner's buildings insurance policies include significant exclusions and limitations during construction:

• Unoccupied property: If the property is unoccupied for more than 30 consecutive days (a common threshold), the policy may exclude or limit coverage. Major renovations often leave properties unoccupied for months.
• Works exclusion: Many policies exclude damage caused by, or resulting from, ongoing construction or renovation works on the property.
• Subsidence: Policies may suspend subsidence coverage during basement or underpinning works — the most common time for ground movement to occur.

Before starting a significant project, contact your buildings insurer to notify them of the works and confirm that your policy remains in force. Many insurers require a specific "renovation extension" or "works in progress" endorsement for the construction period. Failure to notify the insurer of significant works can void your policy.

Specialist Construction Insurance

For major renovation projects — particularly full house refurbishments or basement developments in NW3 — specialist construction insurance may be more appropriate than relying on endorsements to a standard homeowner's policy. Specialist policies cover:

• The existing structure and its contents during the full construction period
• The works in progress (complementing or replacing the contractor's CAR policy)
• Public liability for activities arising from the homeowner's project management role
• Cover during unoccupied periods

A specialist insurance broker can advise on the appropriate policy for a specific project. Your architect or quantity surveyor may be able to recommend a broker experienced in residential construction in north London.

Conclusion

Insurance during construction is an area where gaps and assumptions can prove expensive. Confirming contractor insurance before appointment, notifying your homeowner's insurer of the works, and considering specialist coverage for complex projects are all straightforward steps that protect against significant financial exposure. An architect who briefs clients on insurance requirements as part of their project management service — not leaving it to chance — provides an important safeguard. Use our free matching service to find an architect with comprehensive NW3 project management experience. For cost guidance, visit hampsteadrenovationcosts.co.uk.