Major Risks Renovators Take When Insuring a Home - Owner Builder Club

Major Risks Renovators Take When Insuring a Home

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Before renovating, make sure you check your general home insurance cover as you need to know whether or not the policy you’re taking includes home renovations.

If you don’t pay keen interest to this aspect, you could end up losing thousands, even when you choose to work with a professional handyman.

However, according to, even hiring the best of professional tradesmen cannot do much if you haven’t checked your insurance.

It’s important to understand that renovations are often not covered by Home and Contents Insurance.

According to Abigail Koch from, 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 categorise 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

It's possible 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 Project Isn’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.

Insurance, in this case, a necessary evil…

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