Insurance Considerations When Refurbishing Commercial Property
Refurbishment and improvement works are a common part of managing commercial property portfolios. Landlords and investors regularly undertake projects to enhance asset value, improve energy efficiency or adapt buildings to meet changing tenant requirements.
While refurbishment projects are often seen as part of the asset management process, they can also change the risk profile of a property and may require insurance arrangements to be reviewed.
Understanding how refurbishment works may impact insurance cover can help ensure protection remains appropriate throughout the project.
Even relatively minor works can introduce new risks.
These may include:
- temporary changes in occupancy
- increased fire risk during works
- structural alterations
- use of contractors and subcontractors
- changes to building access arrangements
- storage of materials onsite
Where parts of a building become vacant during works, insurers may apply different conditions or require additional information.
Projects involving structural alterations or changes to layout may also affect how insurers assess the overall risk.
Depending on the nature of the project, contract works insurance may be required to cover damage to the works while construction is ongoing.
Contract works policies may respond to risks such as:
- fire
- flood
- accidental damage
- theft of materials
- storm damage
Responsibility for arranging contract works cover may depend on the terms of the building contract, such as JCT agreements.
It is important to understand whether cover is being arranged by the contractor, property owner or developer.
In many cases, insurers should be notified before refurbishment works commence.
Providing clear information regarding:
- scope of works
- estimated contract value
- duration of project
- contractor details
- risk management procedures
can assist insurers in assessing the risk and confirming appropriate cover arrangements.
Early notification can help avoid uncertainty regarding policy response during works.
Refurbishment works are often undertaken to improve long-term value and enhance the attractiveness of a building to tenants.
Ensuring insurance arrangements reflect the nature of works being undertaken forms part of the wider management of property assets.
Clear communication between property owners, managing agents, contractors and insurers can support continuity of cover throughout the project.
If you are planning refurbishment works and would like to discuss how insurance arrangements may be affected, our team would be happy to help.
