Owner Builder Renovating and Extending
Home and contents insurance is designed to cover an existing home against damage, loss or burglary.
It is not designed as construction insurance. Home and contents insurance policies will, usually, cover the homeowner for a limited amount of renovation work. But there are clear limits to what a policy will let you do. The one simple rule, always and in all circumstances, is check with your home and contents insurance provider BEFORE you start any works as with most policies.
If the value of the work is over $50,000 (what a builder would estimate the job value) then you won’t have full cover. Just because you and your friends can build it for $20,000 it would not matter in the event of a claim, the insurer will work on builder’s rates. Also you need to read very carefully your Home and Contents Policy wordings because the insurer will exclude damage caused by a tarpaulin blowing off roof leaking. Eg: Damage caused by storm, flood or water entering the building.
The common “policy busters”, or the situations that put your project outside the terms and conditions of your home and contents policy include:
- Home and contents policies often exclude liability while the home is being renovated.
- Vacating the building – some extensions or renovations can be dusty, dirty, noisy or just too dangerous to have the kids around. The alternative may be to stay with family or friends, but check your policy. If the property is vacant for a set period of time the home and contents policy may be void. 60 days seems to come up in most policies available.
- Removing external walls or roofing – the removal of external linings will usually trigger home and contents exclusion. The extra risks from the unprotected home include exposure to the elements as well as easier access for thieves and vandals thereby suspending the policy.
It is highly advisable to cover your existing property when insuring your renovation or extension for a few extra dollars, in the event of a claim – let the insurers have the hassle.