Advice and Opinion

Do home renovations affect your insurance policy?

Thinking about making some long overdue home improvements? Before you get started, there are some important points to consider. “If you are planning home renovations, it is essential to inform your insurer that your policy remains in full effect during this time,” says Bertus Visser, Chief Executive of Distribution at PSG Insure.

Most policies also require that the home remains occupied while it is insured. Your insurance company obviously feels that your house is less likely to be burgled as long as there’s someone living in it. If you have to leave your home for an extended period while renovations are being carried out, inform your insurer and make sure this won’t have too much of an adverse effect on your cover.

Renovations can increase the value of your home

Your home insurance policy covers the replacement cost of your home in the event of significant loss or damage. Anything that affects the replacement cost of your home – say, a new bathroom or marble top counters in the kitchen – can also affect your premium, and the amount for which you are insured. “Make sure you inform your insurance company as soon as possible of any significant upgrades,” Visser adds.

If the renovations you have decided to undertake are extensive enough (such as replacing an exterior wall or retiling the veranda roof), your insurance company may decide to reclassify your policy to that of a ‘building under construction’, rather than a single family dwelling. If there’s only half a roof covering the lounge or if the master suite has a wall or two missing, it could affect the condition of the contents of your home, which are also covered by your insurance policy.

Consider your contractors

Another consideration for many home renovators is the safety of workers on the property. “If a worker or anyone else is injured while work is carried out in or around your house, you may be liable for costs and damages relating to injuries,” Visser says.

“Before you hire a contractor, make sure that they have insurance for their workers. You should also review the amount of liability cover you have. It may be worthwhile to increase your cover during the renovation period.”

If your home is an older one, renovations may uncover potentially hazardous building materials. Contractors may also use a construction technique that does not conform to current building regulations. “Some of these changes may significantly affect the scope and duration of your renovations, and therefore your insurance cover,” Visser says.

Using a reputable building contractor may save you from extra insurance costs due to incomplete or faulty workmanship.

Start by planning properly

Make sure that 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 building plans. You could also end up with a nasty liability claim from neighbours should your plans not be in accordance with building regulations.

“Once your upgrades are complete, make an appointment with your insurance adviser as soon as possible. Talk about the changes and discuss whether your insurance cover needs to be altered,” Visser concludes.