Renovating a home is a big investment, both financially and emotionally. While renovations can be an exciting process it is important that home owners do not forget about the potential insurance aspect of home renovations, and speak to their broker prior to any construction work to ensure that their policy will cover any unforeseen events.
This is according to Lynda Brown, Regional Manager: Kwa-Zulu Natal at MUA Insurance Acceptances, who explains that when altering a house, there is a change to the building and this is material to the insurance risk and therefore the insurer has to be made aware of the renovations. “During a renovation unforeseen damage can occur to the home owner’s possessions or the house itself. In the event that the policyholder does not disclose the alternation(s) at commencement, they run the risk of having their insurance claim for damages occurring during the renovation process rejected.”
By informing the insurer the home owner is providing them with a platform to review the risk and apply revised terms to the insurance policy, while the contractors are renovating the home, says Brown.
“If the contractor causes any damage to the house it is important that the home owner lodges a claim, even when it is determined that the contractor is liable. Provided that the insurance provider agreed and extended the cover to note the renovations, the homeowner may continue to lodge a claim with the insurer, who in turn has right of recourse against the builder. Failing this, and dependent upon the building contract conditions, the builder will be responsible to settle any damage caused.”
Brown says that it is therefore vital that home owners choose a good contractor with a proven track record to handle their project. “It is important to do research on the contractor to ensure that they are a registered building contractor in line with Master Builders Association and adhere to National Building Regulations. It is also advisable to get it touch with some of their recent references, to ascertain whether the homeowner was satisfied with their work”.
“Another concern for the home owner when they do renovations, would involve their movable property within the home. The increase in risk is evident when numerous contractors are working within the home, and therefore it is not uncommon for insurers to restrict theft or attempted theft of movable items, where the policy will only pay out if forcible entry into or out of the premises is evident.” She advises that all items of value like jewelry, art, collectables and watches should be locked in a safe or a bank vault during renovations.
She notes that another reason why it is important to notify the insurance provider of any alterations to a home, is because the worth of the home will increase once the work is completed. “It is vital that the home owner’s policy reflects the new updated replacement value of the home, to avoid being under insured”.
“Home owners often overlook the insurance aspect of renovations and do not notify their insurance provider of their planned renovations. Some insurance providers have a standard policy extension that allows for capital additions or extensions, but will only pay a claim for damage to those addition provided that the insurer was notified about the additions to the home within a stipulated time period”.
“Best practice prevails in these situations and home owners are advised to contact their broker or insurance provider prior to commencement of any alternations,” concludes Brown.