Do I need home insurance for renovations?
Renovators opt for insurance because it can provide financial cover if a renovation mishap results in damage. But there are certain things to understand and actions to take before you start.
Firstly, speak to the insurance company before starting the renovation as policies may become void if you fail to do so. This means that if anything goes wrong during the renovation, the damages will not be covered by your home insurance policy.
Some insurers may exclude regular home insurance while renovating. Others may offer the cover up to a pre-defined limit. Understanding home insurance for renovation projects before beginning is essential.
Does home insurance cover renovations?
While renovating, it’s common to take out home and contents insurance and a builder’s insurance. Some also take out additional cover for an extra premium if renovations aren’t covered.
If your insurance company doesn’t provide the cover, you may wish to consider cover from another insurer. Some insurers extend builder’s insurance for the entire home, which can be a replacement for home and contents insurance while renovating. The builder’s insurance covers financial expenses resulting from any damage caused to your home while renovating.
Smaller renovation projects
Minor renovation projects may be covered under your standard home insurance policy. Small modifications like fixing a bathroom or changing the partition wall do not significantly alter your home's structure and are sometimes covered under a standard policy. It’s important to check whether renovations compromise your home’s safety, as this can sometimes determine whether coverage is provided.
Larger renovation projects
Insurance for homes under renovation can be more complex if you’re looking at larger projects. Some key facts to keep in mind include:
- If you move out during the renovation work and the home remains vacant for more than a pre-specified time, the policy benefits may lapse.
- As already mentioned, notifying your insurer about the proposed renovation is necessary, and some insurance companies may ask you to list all building works as an extra.
- If you plan to do the renovation work yourself, renovators home and contents insurance may not be adequate. You may need builder's insurance in addition to the standard policy. If you hire a contractor, ensure he has a builder's insurance too.
- If your existing policy does not offer cover during renovation, searching home renovation insurance Australia may help you find a local insurer that does.
Is the damage caused by the contractor covered?
Under a comprehensive home renovation insurance policy, damage caused by the contractor should be covered. Don’t forget to check if the cover extends for stolen items. Several insurers are wary of providing home renovation insurance because your home is often unoccupied for longer periods.
Generally, damage will be covered by the builder’s insurance; however, it may be limited to only those areas that are being renovated. To extend the builder’s insurance cover, you may have to pay additional fees.
Do you need to modify the sum insured after the renovation?
Often the value of your property increases after renovations. As the value may increase by a significant amount, you may need to lift the sum insured for the home and contents insurance policy to ensure you get an appropriate pay out if something goes wrong.