An interesting article from The Commonwealth Bank on “Know your cover- What home Insurance won’t protect you from!”
The article highlights what owner builders/renovators need to consider before starting to renovate or extend.
Under the heading Renovations the questions are asked and must be answered to ensure your family home is fully insured during the building project. Homeowners, need to understand that now, their property has become a building site and is treated that way by their Home and Contents Insurer, it is a lot more risky and prone to theft, vandalism, water damage and public liability claims from uninvited people.
So, whether you are Owner Building or using a builder or DIY these suggestions need to be actioned!
Firstly, ring and discuss with your Home and Contents Insurer, explain what you are doing, enquire what the maximum cost of works is before they will NOT hold insurance on the property during the project AND always request it in writing.
If they continue to cover you, good, however if due to the cost of the work they will not cover you, here are your options-
As an Owner Builder, it is important that you insure your existing home and contents with the renovation! Add the value eg: renovation $150,000 + value of the Home and Contents $350,000 = $500,000 Policy Value is what you require.
If you are using a registered builder, ensure they endorse (Add your home) to their Policy, be aware most builders only cover (insure) the work they are doing (renovation) and not the existing home.
If you are doing minor works (DIY) e.g.: kitchen/bathroom, then it will depend on the cost of the works:
- In the event of a claim, insurers access the cost of works as what it would cost a Registered Builder to do the job, not what you did it for and if it is above the maximum value of works, you will not have insurance cover.
- Illegal works e.g.: you remove a window to enlarge the opening, as this is structural work and you have not obtained a building permit, you will not be covered.
- Also, in Victoria if you wish to sell within the mandatory six-year warranty period, insurers will be reluctant to offer Warranty Insurance on illegal building works which could cost you the sale.
Please read your Product Disclosure Statement carefully, ring your Insurer and discuss and get their answer in writing, do not take the risk of under insurance or “she’ll be right” because it may not be right and you stand to lose a lot for a small upfront investment.