Bank forcing us to take out Self Build Insurance.

NerdyNed

Hi,
I hope I've posted this in the right section. I wasnt quite sure where it belonged.

I recently got mortgage approval. One of the requirements is that I take out self build insurance.

The property is roofed, closed in and plastered. So its all second fixing work and some ground works that are needed to finish it.

I've told the bank that I would probably hire a contractor to complete the work, but they insist that I will still need self build insurance.

This is going to be costly. The cheapest quote I've gotten so far is for €1400. What makes it worse is that generally you are paying for 18 months or two years of cover, even though 2-4 months cover would be all that is required.

I was wondering if anyone else has had any experience of this with thier banks recently.

Regards,
Ned

unclebill98

No, get home insurance thats classed as "in course of construction", when the house is done you can convert this to standard HI.

Never heard of being tied into it for 18-24 months, it should be a yearly thing unless your situation is differnent to the norm.

oldyouth

I know exactly what the OP is talking about. Some Mortgage providers will not accept 'in course of construction' insurance in relation to self build mortgages as this only covers property damage to the house.

They need to see Liability insurance in place also. Their rationale is that, if someone sues you as project manager during the build, it could actually bankrupt you and so prevent you from repaying their mortgage. It has happened and some mortgage providers will not be swayed on it as a condition

PM me and I'll tell you more

unclebill98

Very interesting oldyouth. Is there no liability in standard insurances?

oldyouth

unclebill98 wrote: »

Very interesting oldyouth. Is there no liability in standard insurances?

What is often referred to as 'in course of construction' insurance' only covers damage to the property itself. That's all most mortgage providers are interested in protecting. They don't care if someone on site holds you accountable for an injury and sues you, they are only interested in the structure. If it gets damaged, the insurer will reinstate it and they are sorted, as the asset they have a vested interest in is still there holding it's value if they ever foreclose on you

Don't forget, until the house is complete, you have no comfort under the Family Home Protection Act, as it is not a home, yet. An injured party can still take it from you, if you do not have the funds to compensate him for a judgement against you.

No matter what urban myths you listen to about individual subcontractors having their own insurance being adequite protection, it is not. The self builder is the project manager and the risk lies with him/her.

NerdyNed

Thanks for the input folks.

I've had another read through the letter of load offer. I cant find any references to self build insurance, but nor can I find any references to "in course of construction" insurance.

I'll try to get clarification on this from the bank on Monday.

Just to clarify. I was hoping to have a building contractor complete the work as a contract as opposed to me hiring in sub contractors. This was why I was under the impression that self build insurance would not be required.

Ned

oldyouth

Nerdy Ned, providing you do none of the hiring or firing on site and don't interfere with the appointed contractor, you do not need self build insurance. Again PM me for more info, I've dealt with these gombeens many a time

phormium

Unclebill98, your own bank is involved in a court case where customer was advised take out course of construction cover for self build, there was serious accident on site, customer being sued by person hurt, bank being taken to court for misleading/bad advice to customer. Hindsight says customer should have had self build insurance, however banks in general have not promoted it cos they dont sell it and dont seem to be aware of the importance of it. Personally I think solicitor or architect should be recommending it but you could see where customer could get confused if he was advised to get 'under construction cover'

oldyouth

phormium wrote: »

Unclebill98, your own bank is involved in a court case where customer was advised take out course of construction cover for self build, there was serious accident on site, customer being sued by person hurt, bank being taken to court for misleading/bad advice to customer. Hindsight says customer should have had self build insurance, however banks in general have not promoted it cos they dont sell it and dont seem to be aware of the importance of it. Personally I think solicitor or architect should be recommending it but you could see where customer could get confused if he was advised to get 'under construction cover'

Good point. Banks are also scared of getting jointly named in any action from an injury on site, hence the increase in the requirement to have this cover. National Irish Bank probably do this more than others

danbohan

NerdyNed wrote: »

Hi,
I hope I've posted this in the right section. I wasnt quite sure where it belonged.

I recently got mortgage approval. One of the requirements is that I take out self build insurance.

The property is roofed, closed in and plastered. So its all second fixing work and some ground works that are needed to finish it.

I've told the bank that I would probably hire a contractor to complete the work, but they insist that I will still need self build insurance.

This is going to be costly. The cheapest quote I've gotten so far is for €1400. What makes it worse is that generally you are paying for 18 months or two years of cover, even though 2-4 months cover would be all that is required.

I was wondering if anyone else has had any experience of this with thier banks recently.

Regards,
Ned

can you pay it monthly ? , then if you only need 4 months pay 4 months

oldyouth

danbohan wrote: »

can you pay it monthly ? , then if you only need 4 months pay 4 months

The problem with that is that the bank will be noted as an interested party and if the policy gets cancelled, insurers will inform them. It could be a breach of the mortgage conditions and lead to problems

Because self build insurance is rated on the size of the project and not how long it takes to build (subject to a maximum period), insurers are reluctant to allow the premium be paid by direct debit, some do though.

NerdyNed

Thanks for the input everybody.

My wife called to the bank today and it turns out that self build insurance is not required, even though that was what we were told we needed. Today we were being told that 'under construction' insurance would suffice.

That said I'm now wondering whether I should still go ahead and get the self build insurance anyway.

Dan Bohan: Every policy we looked at for self build insurance was for a period of one to two years except for Frost Insurance who were willing to cover us for six months for €795. (not sure exactly what that covered).