However considerable advancements in construction methods brings new risks – for example, some of the new materials used can pose a much greater fire risk than traditional materials.
What are the risks and the insurance implications that brokers should be aware of when arranging suitable cover?
Modern Methods of Construction (MMC) increasingly favoured by house builders today have varied over the years, but generally they involve:
- Volumetric units – homes constructed in the factory as one or more fully finished modules, erected on site;
- Pods – a single room constructed and fully finished in the factory;
- Panelised construction – factory made wall or floor panels that are fixed together on site;
- Sub-assemblies and components – various pre-manufactured parts of the home, including roof panels and chimneys;
- Site-based MMC – innovative methods used on site such as insulated concrete formwork or thin joint blockwork;
- Composite panels – factory engineered and used mainly for exterior cladding, partitioning, load bearing walls and roofing elements;
- Timber framed buildings.
The National House Building Council found that 98% of medium to large housebuilders have used or are considering using MMC.
But properties constructed this way, particularly using modular construction, can be particularly difficult to insure adequately.
Replacing part of a ceiling damaged by a water leak for instance may not be as straightforward as cutting out the affected area and replacing it.
To replace only part of a load bearing panel may cause structural issues. In some cases what might appear to be a small amount of damage could result in whole sections needing to be rebuilt.
Fire too is an ever-present risk – particularly where combustible materials are used within panels where fire can spread quickly.
While design and build methods improving fire resistance should take account of the ongoing safety aspect, with each element of the panel on its own being combustible, if the integrity of the panel were compromised, then the risk escalates.
The materials used in construction have a dramatic impact on the level of insurance cover required and the premium.
Any dwelling which has been constructed using out of the ordinary building techniques or materials is likely to need bespoke broking.
Compliance with building regulations is not enough to satisfy an insurer – it does not guarantee that a building is ‘standard construction’.
Property owners and their advisers must know and understand the construction of the property and pass this information to the insurer to make sure the policy is adequate.
This is where the surveyor’s report can really help, whether it be a full homebuyer report commissioned by the purchaser or via the mortgage survey/valuation – both should provide details of the construction materials.
The construction method is not always obvious either – new materials are often designed to look like traditional bricks and mortar for example but can be a plastic or concrete skin over render.
High value, exceptional properties
At the high net worth (HNW) end of the scale, the affluent home owner will more likely live in the home they desire rather than the house they can afford.
The ability for architects to create elaborate bespoke properties to order never ceases to amaze.
It is also common place for modern construction methods to be fused with longstanding or even listed properties such as a churches or derelict factories, transforming the once traditional into ultramodern high-end residences, containing cutting edge amenities and technology.
The architectural interest and rarity of a high value or prestige home might derive from the very fact of its nonstandard construction.
In the use of expensive imported materials – such as marble, for example – or the innovative building techniques used to achieve the finished eye-catching effect, your high value home might boast the fact that non-standard construction is featured.
Yet “non-standard”, sets alarm bells ringing for many ordinary home insurers.
Many volume markets will actively avoid what they see as difficult to cover nonstandard construction in favour of the simple vanilla properties.
Cover may be declined or offered at a heavy premium and these clients can often struggle to find the cover needed to adequately protect these exceptional properties.
Brokers who are aware of the risks of ‘the wonderful and the unusual’ and that have access to a good GI provider, can offer valuable guidance to these clients.