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April 12, 2019
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How does a renovation affect your Home Insurance?

A renovation project not only increases the value of your home, it also comes with many stresses and inherent construction risks that need to be factored into your insurance planning.

When renovating your home, it’s essential to advise us so that we can extend your cover to protect you for the additional risks while your home is under construction. Failure to do so could result in problems at claims stage due to the change in risk during the period of renovation.

Some homeowner’s insurance policies have standard add-ons that allow for home renovations. But often claims for damages to these renovations are limited and will only be paid out if the insurer is properly notified about the construction.

For that reason, we recommend that either you or your builder takes out a Contractors All Risks (“CAR”) policy during the course of the construction.

A CAR policy provides cover for loss or damage to the contract works and loss or damage from the contract works. For example: if your building materials are damaged in a storm or fire, they’ll be covered. Or should a brick fall on a passerby’s head, the liability resulting from that accident will be covered.

It’s advisable to ensure that everyone working on the project also has the correct insurance (liability & professional indemnity cover) in place.

Another concern during a renovation involves movable property within your home. The increased number of contractors on site means insurers often restrict cover for theft or attempted theft during the build by stipulating that they’ll only pay out if forcible entry into or out of the premises is evident.

It’s also important to make sure your building plans are pre-approved as your insurance company could repudiate your claim if your building does not conform to the required building standards and laws.

This is vital for all properties and even more so for properties close to rivers, beaches and dams, as the 50- or 100-year flood line could have an effect on the approval of your plans.

Some home renovations can also reduce insurance premiums

Home renovations don’t necessarily mean that your insurance rates will increase. Roof damage makes up the majority of homeowner claims, so getting a new roof may actually help lower your insurance costs.

Adding safety features such as security systems, smoke alarms and electric fences can also provide discounts and cut the cost of your premium.

Check with us to make sure your insurance matches your renovation plans

Regardless of the magnitude of your home improvements, it’s best to be upfront and honest about what changes are being made so that your policy can reflect and cover your home accordingly.

Once your renovation is done, please check with us that your homeowner’s policy reflects the new updated replacement value of your property to avoid being underinsured.

If you have any queries please feel free contact Jackie or Melissa on 044 382 0550, they’ll be happy to assist.

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