Major Risks Renovators Take When Insuring a Home
When applying for a general home insurance cover, it is important to understand whether or not; the policy you’re taking includes home renovations. If you don’t pay keen interest on this aspect, you could end up losing thousands, even when you choose to work with a professional handyman. Many people can’t entrust the renovation job to a mate they picked from the streets because they know things might just go wrong. However, according to comparethemarket.com.au, even hiring the best of professional tradesmen cannot do much if you haven’t checked on your insurance.
It’s important to understand that renovations are often not covered by Home and Contents Insurance. According to Abigail Koch from comparethemarket.com.au, there are two types of home insurance policies that can be used to cover risks during renovations. Apart from the regular home and contents cover, you (as a renovator) need to ensure the home has adequate builder’s risk insurance cover. Even if you’re both the homeowner and the builder, you might still need additional builder’s cover to take care of your building’s renovations.
10 Common Financial Risks That Renovators Face
1. Renovations Not Covered For Failure to Notify the Insurer
If you don’t notify your insurer on any possible future renovations, then it might be difficult to make claims when the need to renovate arises. For you to be adequately covered, you need to include renovations as an added extra in policies that require you to list any building works.
2. Policies That Can Lapse When a Home Remains Unoccupied For Too Long
Moving out of the home for several months while renovations are going may affect your insurance cover. Be sure to check your insurance policy to get the terms clear.
3. Claims Exceeding $50,000 Are Not Often Covered
Many home and content’s insurance policies do not cover risks that go beyond a certain amount i.e. $50,000. Renovations exceeding this amount will categorize your home as a building site. Claims of this nature may end up comprising your homeowner’s liability cover, which protects your property against claims of injury.
4. Limited Cover for Damage of Building Materials
If the materials you’re working with on site are stolen, catch fire or destroyed by natural disaster, the insurer might only compensate up to $5,000 worth of claims. You can check out for maximum payout levels as outlined in your policy.
5. Most Insurers Do Not Cover DIY Renovators
According to Ms Koch, doing the work yourself can deny you the chance of being covered by the policy. If you can manage your project using the builder’s insurance, then you can benefit greatly from the cover when renovations are needed.
6. Incomplete or Defective Work Cannot Be Covered If the ProjectIsn’t Insured under Builder’s Cover
If you’re building a residential property valued more than $12,000, then it’s compulsory for you to take a builder’s insurance. This cover is meant to protect you (the owner) if the work is completely properly or is defective.
7. New Owners May Make Claims against Previous Owners of the Renovated Home
You may do a great job in renovating your home but upon selling it to a new owner; he or she might not appreciate it. To protect yourself against potential claims of defects, you need to take an owner builder warranty insurance.
8. If the Work Is Abandoned After 30 Days, the Claims Will Not Be Accepted
Some builder’s insurance cover policies do not accept any claims made after work has been abandoned for 30 days or more.
9. Repairs to Inherent Works Are Not Often Covered
Majority of builder’s insurance policies feature limited or no cover against faulty repair work resulting from previous faulty workmanship and/or materials. Always read your policy carefully to understand the terms.
10. Change in Value of the Home Affects Your Insurance Policy
Making renovations improves the value of your home, which might make it necessary for you to update your Home and Contents Insurance to match the new value.