Broker guidance for renovation works that overrun.
It won’t be a surprise to you when we say that most renovation policies overrun and require extra time to complete. This can be for a variety of factors:
- Weather
- Materials delay
- Changing the specification of works
- Contractor liquidations
- Unexpected problems with the existing structure
- Planning delays in build
all possibly playing a part but in truth the list is endless.
In 85% of cases the project duration period is underestimated – so more often than not, you’ll be coming back to us to request an extension.
In this guidance article, we share top tips for managing this scenario with your clients, and highlight what we need from you too.
Is an extension automatically granted?
It is important to note that as RU policies are designed to cover a single project, they will not automatically invite renewal terms. Our products are designed as non-renewable, single
period packages to offer cover for the duration of the works as indicated to us during the enquiry period.
In the event that the project duration is underestimated, we are able to extend the policy with further information provided to us. We can extend multiple times, but please be aware administration fees are applied to every extension.
How do I know if an extension is needed, and for how long?
As a policy nears expiry, you will need to check in with your client to see if they require extra time. You can’t rely on them raising this with you, and without complete clarity on the
situation, your client could be at risk of being uninsured.
In having this conversation with your client, if an extension to the project looks to be required, you will also need to check if anything has changed (such as the scope of work or
the budget) – as this is all important information that we will need to have available when processing the extension request.
We would usually recommend about 20% additional time for a policy extension but it very much depends on the scope of works. We usually look at the description of what’s left to do
and work it out from there.
What information do I need to share with you to request a policy extension for my client? When you get in touch with us to request the extension, we will need to know:
- What is the reason for the delay?
- Has there been any change to the scope of work?
- What has been spent to date? (all costs to date including contracts, materials, fees
and VAT) - What is left to spend (cost including materials and VAT)
- What is left to do (in terms of a description of remaining works)
- Can the client confirm no losses or incidents that may give rise to a loss to date?
- With delays often come increased costs so please ensure sums insured are also up to
date
Having ALL this information to hand from your client before you contact us is important as it means we can more quickly and accurately review and confirm the extension request. Once we have this information, you can submit it as an MTA request via our portal. Once loaded into the portal, our underwriting team can then review the client’s responses and advise on the terms upon which we will offer an extension.
How to submit a policy extension request in the RU Portal.
- Log in to the portal, find the policy and click “change”
- Select MTA reason as Extension and select the number of days
- Amend any fields that should be updated, such as the Existing Structures sum
insured if it needs to be index linked, or the Contract Value if that has increased - Click “issue policy” – this will then tell you that it must be referred
- Click “send referral” and we can then process it and send it back to you
Once the MTA request is loaded into our portal, our underwriting team can then review the client’s responses and advise on the terms upon which we will offer an extension. If it’s a straightforward request, average turnaround times are usually within 24 hours. However, if we can see large, complex or major changes, the request may need referring to carriers for terms and this could take a few days. Additional supplementary policies such as separate liability policies or excess layers, may also take longer to agree.
We will often have the ability to agree some “days of grace” on the main renovation policy if we need additional time to agree terms but this is not necessarily a given, especially when
it’s a large or complex risk that involves several layers of referral.
How can I manage my client’s expectations?
We encourage you to reiterate to your clients at the beginning of a policy enquiry that it is important to be realistic about the time it is going to take to achieve practical completion before the works start. This can help avoid excess stress and additional insurance admin fees during the extension process. The average project overrun time is 25% of the initial period. (12 months becomes 15 months)
We know that the majority of renovation projects overrun – there are often unexpected delays or changes to scope etc – but if a project keeps getting extended time and again we may become concerned that the project is poorly planned or managed. Raising this potential issue with your clients up front is a conversation we recommend is worth having.
Last minute extension requests can’t be dealt with any quicker so we also recommend you should be contacting the client well in advance of the policy expiry to check in and offer
guidance. This is especially true of projects that required a capacity referral at the outset.
Our Underwriters are always on hand to talk you through our policy extension process and to offer advice on navigating this stage with your clients. Just get in touch at team@renovationunderwriting.com
We also share more guidance on understanding property renovation works as part of our YouTube video series. Watch for more insights on the reasons why projects run over time and budget. https://www.youtube.com/watch?v=dMV8eQIfyQA&t=4s>
