Strategies for Home Insurance Adjustments during Renovations
Renovating your pad? Here's why you gotta keep your insurer in the loop andwhen to update your policy
Craving a fresh, swanky living space? Whether you're planning to add a swanky bathroom, a modern kitchen, or making some major structural changes, don't forget to ensure your home insurance policy is up-to-date and covers your renovation jackpot.
Knowing your policy's ins and outs, keeping your insurer informed, and revising your policy post-renovation are the tickets to protecting your investment and enjoying a worry-free post-renovation bliss.
Here's your step-by-step guide on home insurance and renovations to safeguard your humble abode.
Renovations and your home insurance policy - the lowdown
Get familiar with your current policy
First things first, do a thorough check of your existing home insurance policy. Brush up on what's covered and what's a no-no. Standard policies often don't cover damages caused by renovations. If you're taking on the renovation project yourself, ensure your policy covers DIY undertakings, as some insurers may shy away from unlicensed work.
Don't keep it to yourself - spill the beans to your insurer
It's essential to blab about your renovation plans to your insurer. Neglecting to share your renovation ambitions can leave you, my friend, exposed to some nasty risks, including the possibility of your policy turning sour. Insurers dig knowing about any property changes that could influence its worth or risk factor.
Many standard home insurance policies in Victoria require an updated nod to cover renovations, so it's best to notify your insurer before you dive into the renovation chaos to ensure you've got the right coverage in place.
Builder's insurance isn't just for big players
Contractors and builders usually have their own insurance, known as builder's insurance, contractors insurance, or domestic building insurance. Checking on your contractor's insurance situation before diving headfirst into renovations is a smart move.
For renovation projects worth more than $16,000 in Victoria, the builder must take out domestic building insurance. Make sure your builder provides you with a current certificate of domestic building insurance that covers the project's address. Chuck a date with the insurer to verify the policy number is spot on and applies to your address.
Builder's insurance can help cover unfavorable scenarios such as the builder shuffling off their mortal coil, disappearing, or going bankrupt. Insurance can also help cover expenses for fixing structural defects for six years and non-structural defects for two years.
Major domestic building contract
If the cost of your renovations passes the $10,000 mark, the builder must pen down a 'major domestic building contract'. Here are some guidelines to keep in mind:
- Ensure you have the necessary building and/or planning permits (if applicable)
- Confirm that your chosen builder is registered with the Victorian Building Authority
- Get the builder to say 'aye' to conducting a site assessment to check if it's suitable for your renovation plans (and grab foundation data and a soil report if necessary)
- Clearly outline the proposed work in the contract
- Include special requirements and desired finishes in the plans and specifications
- Agree on the cost for both provisional sum items and prime cost items
- Rub elbows with the legal deposit limit
- Nail the price and schedule for progress payments
- Understand the alteration process in case the contract needs to be tweaked
- Agree on definitions for what is considered 'reasonable access' to the building site
For projects under $10,000, you still ought to have a written contract that specifies the work to be carried out and its total cost. Make sure any agreed-upon changes to the contract are also penned down, including any associated costs.
Always go for a fully-accredited, licensed, and insured tradesperson, even for small renovations such as deck repairs.
Let your insurer know about your renovation plans
When spilling the details about your renovation plans to your insurer, share the size, type, and the contractors you'll be working with. Your insurer might also require you to provide estimated project costs and timelines.
Maintain detailed records of your renovation, including receipts, contracts, and photos, during the renovation process just in case you need to file a claim.
Protecting your pad from burglary during renovations
If your renovation project requires you to relocate, it's crucial to plan for temporary housing. Many insurance policies won't cover losses when a home remains unoccupied for 60 days or more, especially if you don't maintain a lived-in appearance.
Keeping that lived-in appearance can be achieved by keeping your lawns tended, your letterbox empty, redirecting your mail and deliveries to your temporary address, setting up a security fence, or leaving lights on.
Contents insurance covers storage jams
Most contents insurance policies cover items stashed away in a storage facility, as long as the facility aligns with certain criteria. For example, your insurer may demand your storage cage/room to be fully enclosed, lockable, and only accessible by you.
Connect with your insurer before stashing your belongings in storage to ensure they're adequately covered while in storage.
Updating your home insurance policy after renovations
Once your renovation is in the rearview mirror, revise your home insurance policy to reflect the enhancements. This helps ensure your new additions are included under your coverage and considered when assessing your home's value (sum insured).
Take another look at your policy limits for building, contents, and liability insurance to make sure they're in synch with your home's post-renovation worth and risks. You might want to consider premium discounts if you've installed safety features during the renovation.
When should you update your home insurance policy?
You need to update your home insurance policy after renovations if:
- Structure's altered: Any modifications that affect the structure of your home can influence its risk profile and value.
- New systems added: Updates to electrical, plumbing, or heating systems can reduce risks and potentially lower premiums.
- Value increases: Adding rooms or significant improvements can up your home's value, requiring adjustments to your policy limits.
- New features introduced: Installations like pools, saunas, or security systems can increase liability and require additional coverage.
Discuss the proposed changes in your home-and-garden project with your insurer, as updating your policy might be necessary to ensure your renovation is covered. After completing the home-improvement project, revision of your home insurance policy is essential to reflect the changes made, ensuring your lifestyle upgrade is adequately insured and the sum insured is appropriate for the increased value.
