A renovation changes not only your home but also your insurance risk. The value of the house goes up, strangers with tools walk through your rooms, there is scaffolding against the façade and the front door is open for much of the day. If something goes wrong, it often only becomes clear afterwards who has to bear the damage: you, the contractor, their subcontractor or no one, because nobody had insured the risk. This article explains which insurance policies play a role in a renovation, what you arrange with your own insurer in advance, what a CAR insurance policy and a contractor's liability insurance do and do not cover, what to look out for in the quote and what to do if damage does occur.
Report the renovation to your buildings insurer
Your opstalverzekering (buildings insurance) covers damage to the home itself caused by fire, storm, water, burglary and similar events. The policy is based on the home as it was when you took it out. A renovation changes three things, which is why you need to report them in advance.
The rebuild value goes up. An extension, a dormer or a new kitchen and bathroom make the home more expensive to rebuild. Many policies include a guarantee against underinsurance, but that usually lapses with a renovation that has not been reported. Without notification, the insurer may pay out proportionately less in the event of damage because the home is underinsured. Pass on the nature of the renovation and the contract sum; the insurer will adjust the insured value and possibly the premium.
Cover during the renovation may be limited. Some insurers exclude certain types of damage or require extra measures while building work is going on: for example damage from rain while the roof is open, theft while the home cannot be locked, or damage resulting from the building work itself. Ask explicitly which exclusions apply and whether the insurer accepts the renovation without additional conditions.
The home may count as unoccupied. If you temporarily move elsewhere during the renovation, the vacancy or unoccupancy clause may come into effect. After a number of weeks or months, that clause limits the cover, often to fire and storm only. So also report that you are staying elsewhere and for how long, and ask what the cover then is. After completion, report again that the home is occupied once more and what the final rebuild value has become.
Contents during the renovation
Your inboedelverzekering (contents insurance) covers your belongings, but here too a renovation differs from the normal situation. Dust, paint splashes and scratches caused by building work are not insured events; in principle that damage is for the contractor if they were careless, and otherwise for you. Belongings you store elsewhere temporarily, with family or in a storage unit, are often only covered to a limited extent or only against certain events; ask about the conditions for contents outside the home. Theft from a home that was not locked or where tradespeople came and went freely often leads to disputes when you claim. Put valuables away, take photos of what stays behind and lock rooms where no work is being done.
CAR insurance: what it covers and who takes it out
CAR insurance, short for Construction All Risks, is the building insurance par excellence. It covers material damage to the works themselves that occurs during construction, whatever the cause, so including the builder's own mistakes, storm, theft of installed materials or vandalism. A CAR policy consists of sections that can be insured separately:
- The works: the construction in progress, including building materials on site. This is the core of every CAR policy.
- The client's existing property: damage to your existing home caused by the works, for example a leak in the kitchen because the roof above it has been opened up. In a renovation this section matters more than in new build; check whether it is included and up to what amount.
- Liability: damage to third parties, such as neighbours or passers-by, caused by the works. This section is usually supplementary to the contractor's liability insurance.
- Auxiliary equipment: scaffolding, formwork, site huts and tools.
- Property of staff and site management and sometimes the transport of materials to the site.
Who takes it out? Most contractors have an annual (running) CAR policy that covers all their projects. For an ordinary renovation that is the normal situation: the contractor holds the policy, and you check whether your project and your existing property fall under it and whether you as the client are a co-insured party. For large projects, or if you manage a lot yourself with individual tradespeople, you can also take out a single-project CAR policy yourself for that one project. That is worth considering when you hire several parties separately, for example a bricklayer for the shell, a carpenter for the roof structure and an installer, without a main contractor coordinating everything; otherwise there is no one whose policy covers the whole job. With every CAR policy, look at the maintenance period: the period after completion during which damage arising from the construction is still covered.
Liability of the contractor and of self-employed tradespeople
In addition to CAR insurance, a contractor has an aansprakelijkheidsverzekering voor bedrijven (AVB, business liability insurance). It covers damage that they or their staff cause to others: a ladder through the neighbours' window, a damaged car, injury to a passer-by. The AVB does not replace CAR insurance. Two limitations matter to you. Firstly, an AVB only covers damage for which the contractor is legally liable, meaning they can be blamed for a mistake; damage from storm or an unknown cause falls outside it. Secondly, many AVB policies include a care, custody and control clause: damage to property that the contractor has in their care or is working on is excluded or only partly covered. Your home is precisely such property. That is why the existing property section of the CAR policy is so important.
If the contractor works with subcontractors or self-employed tradespeople (ZZP'ers), or you hire individual tradespeople yourself, the question is who is insured for their mistakes. As a rule, a main contractor is liable for the subcontractors they engage, but their policy has to cover that. A self-employed tradesperson you hire directly should have their own AVB; ask about it and get them to show you a policy schedule. If they do not have one and cause damage, you will have to recover it from them personally, with all the uncertainty that brings. As the client, in certain cases you can yourself be held liable for damage caused to third parties by tradespeople you engaged, and your own personal liability insurance by no means always covers that. That too is a reason to check the insurance of everyone who will be working at your home in advance.
Damage to the neighbours
The most common renovation damage is not to your own house, but to the neighbours': cracks from demolition work or vibrations, a leak through a party wall, a damaged fence or garden. In principle the person who caused such damage is liable, but the neighbours will come to you first. So before work starts, have a vooropname (pre-construction survey) or structural baseline survey carried out on the adjoining properties, with photos of existing cracks and defects, and have the neighbours sign it. Without such a survey, every crack after the renovation will be attributed to you. Discuss with the contractor which policy covers damage to neighbours and how claims are reported. How to inform the neighbours and what they do and do not have to put up with is explained in Renovating and the neighbours: rights, obligations and good agreements.
Excess, underinsurance and what to check in the quote
Every insurance policy has an excess per claim; with CAR insurance it can be substantial. Agree in the contract who bears the excess if damage occurs to the works or to your home. Furthermore, underinsurance is a real danger with a CAR policy that is not tailored to your project: if the sum insured is lower than the actual value of the works including your existing home, the insurer pays out proportionately less in the event of damage. So do not just ask the contractor whether they have CAR insurance; get them to show you the policy schedule and the conditions.
In the quote and the building contract, check at least the following points:
- A clause stating that the contractor has CAR insurance and an AVB covering this work, with the obligation to provide policy schedules on request.
- Whether your existing property and you as the client fall under the contractor's CAR policy.
- Which general terms and conditions apply and what they say about liability, excess and the maintenance period. Industry terms for consumers, drawn up in consultation with consumer organisations, usually offer a more balanced arrangement than a contractor's own terms.
- Who is responsible for subcontractors and whether they fall under the main contractor's policies.
- Agreements on the pre-construction survey of the neighbours' properties and on who handles damage to third parties.
How to read a quote step by step and which other items to check is explained in Comparing quotes: how to read a building quote. On VerbouwPro you post your renovation free of charge and tradespeople from your region respond with a verified profile and reviews; when you talk to a contractor, always ask about their CAR and AVB cover before you sign.
What to do when damage occurs
- Make things safe first and limit the damage: shut off the water, cover an open roof, switch off the power where necessary. Insurers require you to prevent further damage.
- Take photos and videos straight away of the damage and the surrounding situation, before anything is cleared up or repaired. Note the date, time, who was present and what happened.
- Report the damage in writing the same day to the contractor and to your own insurer, even if you think the contractor is liable. Reporting late can cost you your cover. If the damage is at the neighbours', report it to them too and advise them to inform their own insurer.
- Do not have the damage repaired before the insurer or an expert has looked at it, unless that is necessary for safety. Keep damaged parts.
- Keep the pre-construction survey and the contract to hand; with them you can show what the situation was before the work and what was agreed.
- In a dispute with your own insurer, after the internal complaints procedure you can go to the Klachteninstituut Financiële Dienstverlening (Kifid, the Dutch Financial Services Complaints Institute). In a dispute with the contractor, the disputes committee linked to their industry terms or the courts can provide a solution; legal expenses insurance can help with that.
Insurance is no substitute for good agreements and craftsmanship, but it is the safety net underneath. With a reported renovation, checked CAR and AVB cover, a pre-construction survey of the neighbours' properties and a clear contract, you prevent an incident on site from growing into a financial problem. How to tackle the rest of the preparation is explained in How to prepare for a renovation.