Nuremberg core renovation

A major refurbishment not only changes your building, but also its risk profile and thus the claim that your insurance company will cover in the event of a claim. Owners in Nuremberg who start a major modernization project without first adjusting their policy are giving away protection in the vast majority of cases - and in the rare but serious event of a claim, they are giving away six-figure sums. Insurance adjustment does not belong in the phase after the refurbishment. It belongs before.

Anyone planning a core refurbishment in the Nuremberg metropolitan region usually coordinates architects, structural engineers, tradesmen and building authorities. There is almost always one player missing from this list, whose absence only becomes apparent in the event of damage: the insurance broker. Through the Davis cooperation with our network partner LZK Versicherungsmakler GmbH, we check the suitability of the policy before each construction phase - free of charge, with an open outcome and with the market validation that is part of a structured approach.

In a nutshell:** A core refurbishment significantly changes the replacement value and the risk of damage to your building. A residential building insurance policy that is adjusted before the start of construction protects the investment from the first construction phase, covers interim risks and prevents underinsurance in the finished state.

Why the insured value shifts during renovation

In terms of insurance, your building is insured in the condition in which it was recorded when the contract was concluded. If this condition is changed by a core renovation - through new heating systems, new roof cladding, new facades, new interior fittings, a significant change in living space or the development of new rooms - the reinstatement value also changes. However, without a policy adjustment, the old, documented value applies in the event of a claim. You bear the difference yourself.

In practice, we regularly see this with old buildings in Nuremberg’s inner city districts. A Wilhelminian-style house in the Südstadt district with an insured sum from before the core renovation, where the living space, substance and furnishings have to be completely revalued after the renovation. If major damage occurs after completion of the renovation, the old policy only covers a fraction of the actual restoration. This is classic underinsurance, and it is regulated in insurance law in such a way that the insurance company does not pay the full damage, but reduces it proportionately.

The second aspect concerns the risk profile during the construction phase. While walls are open, scaffolding is up and tools and materials are stored on the building site, the risk of damage such as fire, theft or water damage is statistically significantly higher. Standard home insurance policies often only cover construction risks to a limited extent. Supplementary building insurance is therefore the only way to insure the construction phase in many renovation projects.

What is actually changing: Three typical refurbishment cases in Nuremberg

In our practice, we encounter three core renovation patterns, each of which raises its own insurance issues. When an old building is completely gutted for owner-occupation, such as a Gründerzeit terraced house in St. Johannis or an urban villa in Erlenstegen, practically everything changes: living space, substance, value structure and risk profile. In this case, the policy must be redrafted before construction begins, as an adjustment to the existing building rarely leads to conditions in line with the market.

In the case of partial refurbishment with a focus on energy efficiency, i.e. roof refurbishment, facade insulation, heating replacement and window replacement in one construction phase, it is primarily the insured value that changes. Adjusting the existing policy is often the better option here, as the substance remains the same and only individual components are revalued. It is important that the adjustment is made before the start of construction, because new heating systems and new roof cladding entail specific risks that are reflected in the premium calculation.

When adding a storey or extending previously unused areas, such as an attic conversion in an old building in Schwabach or an extension in Fürth-Dambach, there is also the question of whether the adjustment to the living space will significantly change the insurance contract. In most policies, there is a duty of disclosure from a certain change in living space, the breach of which can also lead to benefit reductions in the event of a claim.

The construction phase: Who pays if something happens now?

The construction phase is the trickiest part of a core renovation in terms of insurance. While walls are being chiseled open, pipes are exposed and materials are temporarily stored, damage that rarely occurs in the existing building accumulates. Water damage from exposed pipes, a fire caused by hot work on the roof truss, theft of building materials or tools - all of these are statistically many times more likely during this phase than during normal operation.

Homeowners’ insurance typically covers the completed building. The ongoing construction phase is often the responsibility of a separate construction insurance policy. This insures the building against unforeseen damage during the construction phase and is particularly useful for extensive core renovations. In some constellations, the existing homeowners insurance takes over parts of this function via a so-called „extension and conversion clause“, but this is the exception, not the rule.

There is also the question of liability. Anyone who is responsible for passers-by falling on a building site, damaged neighboring properties or damage caused by falling building components needs appropriate builder’s liability insurance. Here too, clarification before the start of construction is cheaper than after the first incident. Market validation of the necessary policy extensions is part of the preparation for any serious renovation project.

Davis practice: Insurance as part of project management

In the mandates in which Davis & Partner supports owners in a core refurbishment with subsequent sale, we clarify the insurance issue before any other step. The free policy check via our network partner Dejan Zivkovic at LZK provides an open-ended market comparison. Around two thirds of the policies reviewed are then either optimized or replaced by a better contract. The remaining third remain in place, but with documented certainty that the policy is in line with the market.

The policy adjustment typically takes place in three stages. Before the start of construction, the construction phase is covered, either through construction insurance or by extending the existing policy. During the renovation, changes in the living space and risk profile are documented. Once the refurbishment is complete, the policy is adjusted to the new reinstatement value. This structuring follows the same logic as a bank-ready property file: every step is traceable, every status is documented.

For owners selling after completion of the restoration, the properly maintained insurance history is a concrete selling factor. Buyers and their banks prefer properties where all modernizations are fully documented - and the insurance situation is part of this documentation. The price architecture of a completely refurbished property is noticeably higher if the buyer can rely on a consistent file.

When is the right time to check the policy

The optimum time for the policy review is before the first binding order for a trade is placed. At this stage, the planned measures are clear enough to make a well-founded adjustment, but not yet so far advanced that an adjustment would be necessary during the ongoing construction process. Those who use the free check via the Davis cooperation with LZK in this phase incorporate the insurance issue into the overall planning in a structured manner.

A somewhat later inspection - after the start of construction but before the first critical construction phase - is also possible, but the negotiating position with insurers is then more limited because the risk of construction progress is already a factor. An inspection only after completion of the renovation often leads to conditions that do not leverage the full optimization potential.

For owners who are currently in the middle of a refurbishment without having checked the insurance beforehand, the subsequent adjustment nevertheless makes sense. It at least protects the remaining construction phase and correctly adjusts the finished state. The quickest way to reach a decision on this adjustment is to send a brief inquiry to Dejan Zivkovic, who will assess the situation and suggest the next steps.

When the sale follows: Ownership, insurance and handover

Anyone who sells after the core renovation not only hands over the property, but also the newly established insurance situation. The legal logic of the handover - automatic transfer of the policy to the buyer, special right of termination from entry in the land register - remains unchanged. The difference: An optimized, documented policy after refurbishment is a selling point. An outdated, unadjusted policy is a negotiating point for the buyer.

In the Davis practice, we combine refurbishment support with the subsequent sale in a structured project framework. Insurance is one of the standard checks that are completed at least three months before marketing begins. This lead time allows for an open-ended adjustment without the buyer having the feeling of having to take over a policy that has not been completed.

A short request via the Davis network form for buildings insurance is all it takes to start the process. You will hear from Dejan Zivkovic within one working day and receive an initial assessment within 48 hours. If you start the free property valuation at the same time, you will have insurance and market value documented in the same week.

FAQ - Residential building insurance for core renovation in Nuremberg

**Do I have to inform my insurance company about the renovation? Yes, in most policies there is an obligation to notify the insurer of significant changes to the building. Anyone who makes significant changes to the living space, heating system, roof structure or substance without informing the insurance company risks reduced benefits or the complete exclusion of claims in the event of a claim.

**Do I need building insurance during the renovation? Yes, for extensive core renovations. Standard homeowners’ insurance policies usually only cover the specific risks of a construction phase - exposed pipes, hot work, stored building materials - to a limited extent. Construction work insurance specifically closes this gap.

**What happens if I don’t adjust the policy after the renovation? In the event of a claim, the old, lower sum insured will then apply. You are responsible for the difference between the actual restoration value and the documented policy. In the case of a completely renovated old building in Nuremberg, this can quickly amount to six-figure sums.

**Can I adjust my insurance without changing providers? In most cases, yes. It is possible to adjust the insured value and the clauses with the existing provider. A market comparison check will clarify whether the conditions are in line with the market. You can obtain this free of charge via the Davis cooperation with LZK.

**How long does a policy adjustment take? You will receive the initial assessment within one working day. A well-founded adjustment with a documented market comparison is typically available within two weeks. Dejan Zivkovic schedules an on-site appointment for complex properties with listed buildings or special substance.

**What does the inspection and adjustment cost? The review and market comparison via the Davis network is free of charge for you. Adjustments to the existing policy are usually made at no extra cost or with an adjusted premium structure that reflects the changed risk.

**Does this also apply to rented properties? Yes, the same rules also apply to rented residential buildings. Residential buildings insurance covers the structural substance regardless of whether the property is owner-occupied or rented out. When renovating rented properties, however, there is an additional question regarding loss of rent insurance, which Dejan Zivkovic discusses separately.