INSURANCE CONSIDERATIONS WHEN RENOVATING A HOME
Renovating a home is a significant investment, both financially and emotionally. Whether it involves a fun DIY project or an extensive makeover with a substantial budget, it’s crucial to understand how these changes can impact home insurance. Before any construction work begins, it’s essential to ensure that the insurance policy will cover any unforeseen events.
Understanding the distinction between building
insurance and home contents insurance is critical
before renovating. Building insurance covers the
structure of the house—walls, floors, and roofs—while
home contents insurance protects personal property
like furniture and electronics. Often, renovations
involve adding new furniture or valuables, which may
need to be added to the home contents insurance for
adequate coverage.
Before proceeding with home upgrades, it is
recommended to consult with an insurance provider or
advisor to determine whether the insurance coverage
will change. Some home insurance policies may not
cover renovations or upgrades, potentially leaving the
property underinsured. It is important to understand
the insurance contract and ask pertinent questions to
avoid surprises. Additionally, covering the materials
involved in the renovation process or considering
separate commercial insurance coverage may be
necessary.
Home insurance premiums will likely increase after
renovations due to the added value. After getting preapproval for renovation plans, it is crucial to finalise
the necessary documentation to ensure that the
structure of the home and valuables are adequately
insured.
It’s important to note that most personal insurance
policies will only cover the extensions after they are
completed, and it might be required to explore the
option of a contractors all risk insurance. Additionally,
damage worsened or caused by renovations, as well
as theft of house contents by building service
providers, may be excluded.
When upgrading a home, ensuring that the hired
company has insurance for its workers is important.
Researching and hiring a reputable company and
asking for a copy of their insurance as proof, is also
crucial. Understanding the limits of liability coverage
on homeowner’s insurance will help make provisions in
case anyone gets injured during the renovation.
Homeowners often overlook the insurance aspect of
renovations and fail to notify their insurance provider
about planned changes. Some insurers have a
standard policy extension for capital additions or
extensions but claims for damage to these additions
are only payable if the insurer was notified within a
stipulated time. Best practice in these situations is to
contact a broker or insurance provider before starting
any alterations. This ensures that all changes are
covered and helps avoid potential complications with
the insurance policy. Renovating a home can be a
smooth and exciting process when the necessary
steps are taken to protect the investment.