So you've finally decided to re-do the bathroom or put it in your dream kitchen? Before you or your builder pick up the tools, it's important to get your facts straight about what your insurance can cover if something goes wrong. Having the right information can even help you avoid any mishaps or dramas.
Things To Remember
Check Your Policy To See What You're Covered For
Whether you're doing a small DIY project or scoping out a larger job with a builder, the extent of your coverage can differ from insurer to insurer. That's why before you start the project, it's important to have a read of your Product Disclosure Statement. If your insurer doesn't cover your renovation, don't fret – you might be able to get the cover you need through contractors' and builders' insurance.
Builders' And Contractors' Insurance May Cover Your Renovation.
Before starting the project, have a chat with your builder to see if their insurance covers the whole structure or just the part they're working on. If they only have partial cover, it could be worth asking if you could pay them a bit more to upgrade the coverage to include your whole home.
Try To Minimise The Amount Of Time Your Property Is Unoccupied.
While you may be able to stay at home during smaller jobs, major projects may require you to move out for an extended period. However, if your home remains unoccupied for more than 60 days, many insurers will place limitations on your home and contents cover, such as higher excesses. Some may even 'void' your policy. To keep your insurance valid and reduce the risk of higher costs, work with your builder to plan major works in a way that keeps the amount of time your home is unoccupied to a minimum.
Secure Your Home By Making It Look More 'lived-In.'
With walls coming down, tarps in place and ladders lying around, burglars may be tempted by the worksite that is your home, so make sure it's secure and looks as lived-in as possible. Consider putting up a security fence, leaving on lights, and regularly checking your letterbox to help deter thieves from entering. Store any valuables in a secure container or move them somewhere safe off-site while the renovation occurs.
Update Your Policy To Include Your New Renovations
After the renovation is finished and you've popped the champagne, contact your insurer to update your home and contents policy. If you were to damage your new marble bench accidentally, or your new floor-to-ceiling window was to get smashed, it's good to know you're covered.
FAQs About Renovation Insurance
Before you pick up a hammer — or hire someone else to do so — you should know the facts about home insurance while renovating. Think about:
- whether your insurance covers you during the reno period,
- what might void your policy, and
- what types of projects are covered.
The weather isn't put on hold when your house is under renovation — the risk of flood*, storm and fire remain. So, it's important to make sure you're properly insured, even if you're still in the building phase.
Suncorp Home And Contents Insurance
Suncorp Home and Contents Insurance cover up to 12 months of legal liability on home renovations, alterations or building extensions — if the work is worth less than $50,000 in total. Even though we cover legal liability in some cases, the renovations themselves (and their resultant damage) won't be covered. However, we'll cover damage to your home caused by unrelated events, like flood* or storm, that happen during the renovation period — remember to let us know before you start any Renos, no matter how small.
Tradies' insurance, otherwise known as builders' or contractors' insurance, may provide some cover for larger projects. Before you start any project, ask your tradie what their insurance covers.
Picture this: you're working on a small DIY project, and you accidentally smash your TV or knock a glass of red wine onto your new white carpet. Luckily, Suncorp Home and Contents Insurance have your contents covered for reno-related accidents like these — as long as the home modifications are minor.
You were wondering what Renos may count as minor? Anything that doesn't alter the structure of your home, for example, changing a partition wall or replacing floating floorboards. Whether or not you'll be covered depends on the work's cost, nature, and duration — so always contact us before you start any project.
In most cases, there are two types of policies needed to cover your project adequately:
- Builders insurance
- Check that your builder has builders insurance. This can ensure that your home is covered for loss or damage due to the renovation work. It can also cover legal fees if someone is hurt or killed while on your property.
- Home and contents insurance
- Some home and contents insurance policies will exclude cover for any renovation work, others will charge an additional premium, and many will not cover you if the renovation project is valued above a set amount – often around $20,000 to $50,000. If your current provider refuses to cover you, you can change providers. Once your home has been renovated, you'll likely need to increase the amount it's insured for (sum insured).
Insurance For Small Renovations
You might still be covered with standard home insurance for minor renovations. For example, if you're changing a partition wall in a room or fixing a bathroom, you're not substantially changing or altering the structure of your house. Aside from the $50,000 cap, a good rule of thumb when considering home insurance and renovations is if the alterations aren't making your house less secure (i.e. more vulnerable to theft and structural damage), then your current policy is more likely to cover you.
Always read your product disclosure statement (PDS) beforehand to ensure you are covered, as exclusions regularly apply. For example, many do not cover any construction, alteration or renovation work. Most also require you to inform them when any construction, alteration or renovation work will start or finish. Also, be aware that no matter the size of a renovation, most insurers have exclusions for water damage that occurs during or as a result of any renovation job.
Insurance For Big Renovations
While renovating, home and contents insurance gets more complicated the bigger the job gets. Here are some key facts you need to be aware of:
- The vacancy can void your policy. Some policies will be voided if your home is empty for a specific amount of time. If you're thinking about moving out while you renovate, you might need to think again. Some policies can lapse after just 60 days.
- Tell your insurer you're renovating. If you don't notify your insurer of your renovation plans, your policy may become void – meaning if something goes wrong during the renovation, you won't be able to claim. Many insurers require you to inform them of any changes you're making to your property.
- You might need builders insurance. DIY renovators need extra cover as most policies won't cover homeowners undertaking renovations. If you're doing any part of the renovation yourself, then you may need builder's insurance on top of your home and contents cover. If you aren't doing any work yourself, you need to ensure your contractor has builders insurance.
- Renovation insurance might fill the gap in your home and contents insurance policy. If you're having difficulty finding a home and contents insurance policy while renovating, then renovation insurance could be a viable option. This type of specialist insurance is tailored to those having difficulty getting cover. However, it's hard to say if it's good value yet because it's relatively new.
Will insurance cover me for damage that contractors cause?
If your home insurer agrees to cover you for renovations, then you should be covered for damage or loss that contractors cause. Make sure to ask if this also includes cover for stolen goods and items. One of the main reasons insurers are reluctant to provide home insurance during renovations is that your home is often unsecured for long periods.
In most cases, though, you will have to rely on builders insurance. If this is the case, make sure that your builder has insurance cover if your home is damaged due to renovation work. Please speak to your contractor and their insurer, as it's often the case that builders insurance will only cover the portion of the home they are working on. To temporarily extend the builder's coverage to a third party, you will probably need to pay an additional fee.
- Important Note: In most cases, homeowners aren't covered if work on the project is abandoned for more than 30 days. A builder's insurance policy may not cover any claims for damage caused by the abandonment of the renovation work exceeding 30 consecutive days, which could leave some owners in a sticky situation, particularly if you've hired someone who has too many jobs on the go or if your project takes place during the rainy season.
Don't Leave Your Home Unoccupied For Too Long.
Some home insurance policies will not cover you for any claims if your home has been left unoccupied for a specific amount of time – usually between 60 and 90 days. So if you plan to move out during the renovation, contact your insurer and let them know about the situation.
Don't Forget To Update Your Home Insurance After A Renovation.
Once your home renovation project is complete, the value of your property is likely to have risen – so you'll need to update your home and contents insurance policy to reflect the new value of your home. If your home is underinsured and an insured event like a fire, storm or theft occurs, you could be hit with a large out of the pocket bill. To avoid this, you'll need to update your sum insured based on the new valuation of your home and contents.
Insurance Risks When Renovating
There are big profits to be made when renovating. But, it's not always smooth sailing for those trying to manufacture a profit through a property refresh. The lure of strong capital gains and higher rents for renovators is ever-present, but so too are some big risks. However, I'm not talking about the risks of going beyond your budget or over-capitalising: these are a given.
I'm talking about the other common yet overlooked oversights that renovators make — such as assuming that their home and contents cover is adequate to cover their property through the renovation period. Often, this isn't the case.
The Insurance Reality Of Renovating
When you're renovating, whether it's your own home or an investment, it's essential that you understand what is and isn't covered under the property's home and contents cover to ensure you are prepared in the event of any on-site mishaps. In most cases, two types of policies are needed to cover any risks in your renovation adequately: home and contents cover and cover taken out by the builder. If you are the builder as a DIY renovator, then you will need to take out builders' cover in addition to home and contents cover. Here are some of the more surprising financial risks that renovators may face, often without even realising the possibility for a big financial setback:
It Would Be Best If You Told You're Insurer You're Renovating.
If you don't notify your insurer of your renovation, some policies may be void — meaning if something goes wrong during the renovation, you can not make a claim. This is because many policies require you to inform them of any changes you're making; some insurers even require you to list any building works as an added extra.
The Vacancy Can Void Your Policy.
Living through a renovation can be a nightmare, and many of us think about moving out while renovating. However, some policies will lapse if a home is vacated for longer than a specific period. If you're thinking of moving out while you upgrade your kitchen and bathroom, then you may need to think again, as some policies can lapse if homeowners vacate the home for more than 60 days.
Claims Over $50,000 Are Not Usually Covered.
Most home and contents policies do not cover homeowners for claims that occur during renovations over a set amount, often capped at $50,000. Renovations over $50,000 will categorise homes as building sites. Over this value, homeowners' legal liability cover — which protects them against claims for injuries on the property — could also be compromised.
The Policy Is Affected If The Value Of The Home Changes.
Ideally, once the home renovation is complete, you will have bumped up its value by a significant sum. You will therefore need to revise your home and contents cover to ensure it reflects the home's new value, as under-insurance can leave you severely out of pocket.
DIY Renovators Need Extra Cover
Most policies won't cover homeowners undertaking renovations. However, suppose you are undertaking any part of the renovation yourself, or co-ordinating as a project manager. In that case, you may need builders' insurance on top of their home and contents cover: best to check with your insurer to see their specific policy.
Your Builder Must Be Insured.
Homeowners aren't covered against incomplete or defective work if their builder hasn't insured the project. However, not many homeowners know that builders must have their builders insurance if the residential work is over a certain value. This protects the homeowner if the builders don't complete their work or the renovations are defective; therefore, homeowners must check their builder's policy is up to date.
Was No Work Done? No Insurance Cover
In most cases, homeowners aren't covered if work on the project is abandoned after 30 days. A builder's insurance policy might not accept claims for any damage arising out of abandonment of the renovation work exceeding 30 consecutive days, which could leave some owners in a sticky situation — particularly if you've hired someone who has too many jobs on the go, or during the rainy season.
Secure Your Home
A house that's being renovated may catch the eye of opportunistic burglars, so be sure to secure your home. Make it look as lived in as possible. Here are some ways to protect yourself:
- Put up a security fence.
- Leave the lights on when the property is unattended.
- Clear your mail regularly.
- Store valuables in a secure container or move them off-site.
Keep Your Property Occupied, Where Possible.
Certain reno projects require you to move out of your home for extended periods. Before you pack your bags, know that you'll have to pay a higher excess if you claim an incident that occurred while your home was unoccupied for more than 60 days. Plan things out with your builder in advance so that you won't hit this limit.
Remember to contact your insurer before you get out the wine glasses and invite the guests. Renovations add value to your home, and chances are, your home insurance policy needs to be updated. To avoid being underinsured, consider revaluing your home.