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February 19, 2015

Protecting your home during renovations and construction

Building a new home, or renovating your current one, is an exciting experience. However, a house under construction or renovation is more susceptible to damage or destruction than at any other time. The combination of unstable conditions, incomplete structures, dangerous machinery, and unsecured property can lead to accidents, injury, theft, or fire. Further, allowing various contractors and workers to access your property compounds loss opportunities.

Due to the increased hazards and large loss potential of homes under construction, insurers often include provisions in their policies that limit coverage during construction or renovation. Communicating and working closely with your insurance advisor throughout the process will help you navigate your exposures and help protect you, your family, and your home from some of the common threats that arise during the construction process and after completion. 

Contractor's Liability

Choosing your contractor is possibly the most important decision in the construction or home renovation process. Before signing a contract, it is imperative to make sure your contractor and his subcontractors, if applicable, are properly insured, have no criminal pasts, and will agree to insulate you from potentially being held liable for accidents or problems due to negligence by the contractor or anyone under his or her direction. Consider the following recommendations when hiring a contractor and crew.

  • Request and check potential contractors’ most recent project references, as well as financial references from trade vendors and creditors.

  • Contact the Better Business Bureau (BBB) and state licensing agencies to gather reports on their reliability and trustworthiness, confirm their licenses, and determine if they have any complaints filed by previous clients or safety violations from other construction projects.

  • Confirm that your contractor and subcontractors have adequate liability and workers’ compensation and who within the crew it covers.

  • Notify the contractors that they and their subcontractors and crew will be expected to have their backgrounds professionally screened. You will have to bear the cost, but performing criminal background checks on all workers is worth avoiding the potential risk to your family and the project.

  • Don’t take unnecessary responsibility for losses that may occur during the course of construction by signing documents that contain a waiver of subrogation clause or hold harmless agreement.

  • Before starting construction, have a conversation with your insurance advisor and your contractor about what precautions will need to be taken in order to obtain proper insurance coverage. Make sure your contractor understands any stipulations and is willing to adhere to the loss-prevention plan outlined.

Protection Against Theft

You may be forced to temporarily relocate during large-scale home renovation or construction projects. Therefore, when the construction crew leaves each day, your home and belongings are left unsupervised and may be at risk of theft. Below are a few tips to help mitigate the threat from burglars.

  • Install temporary motion sensors during new home construction and a permanent burglar alarm system once the home is complete.

  • If you are renovating your home, make sure your burglar alarm, if applicable, is functional during the project and particularly after your construction crew leaves each day.

  • Install outdoor motion-activated lighting to illuminate all sides of the house and temporary fencing around the perimeter of your property, including a gate or chain link across the driveway.

  • Consider hiring a security guard or installing a surveillance system to be monitored at a central location. The guard should regularly inspect the interior and perimeter of your home for any water leaks, smoke, or intruders. Place cameras for a surveillance system around the interior and perimeter of your home.

Protection Against Fires

Construction projects often involve new electrical wiring and highly combustible materials throughout the house that can lead to a devastating fire. Recently, a Marsh Private Client Services client’s $20 million home in the final stages of construction burned to the ground because the construction crew disabled the new fire alarms and left the property without knowing an electrical fire had started in another part of the house. Although the home was destroyed, the good news is they had the appropriate coverage in place to cover such a loss. Below are some ways to help avoid fire damage to your home.

  • Keep a sufficient number of fire extinguishers on each level of the house and throughout the work site.

  • Consider installing a sprinkler system and a UL-listed (Underwriters Laboratories) water flow alarm.

  • If you are constructing a new home, install a temporary fire alarm with heat sensors on each floor monitored by a UL-listed central station company. Install a permanent system once your home is completed.

  • If you are renovating your home, make sure your current fire alarm is kept intact while construction is taking place.

  • Arrange to have the work site cleaned up and all debris as well as flammable materials removed at the end of each day.

Marsh McLennan Agency Private Client Services is available to assist you during every step of a construction process. Contact a MMA Personal Risk Advisor prior to starting a construction project. They will help you determine which precautionary measures discussed in this report are necessary for your home and will help ensure you have essential insurance coverage in place before you begin. Being prepared will help you reduce your worries, help the course of construction run smoothly, and allow you to enjoy your beautiful new home.


*Content provided by ACE, AIG, Chubb, Fireman’s Fund, the U.S. Department of Justice, and the Insurance Information Institute.