If you are planning to remodel, upgrade or renovate your home, it may affect your home insurance cover. It’s important to keep in mind that all home insurance policies are based on the current value of your property, as well as the level of risk there is that something could go wrong.
Whether you’re simply upgrading your appliances, redoing your outdoor pavers or extending your home, you will need to ensure that the same insurance cover still applies once the renovations have been completed.
Will you be renovating yourself?
Depending on how large your renovation is, you may choose to either hire a professional builder or tradesman, or complete the renovation yourself.
If you have only limited building experience and knowledge, you will need to be confident that the work you produce will be up to standard and that it follows any local or government building regulations. You will also need to use standardised building materials. If you don’t, you may find that deviating from the rules will also make you exempt from claiming on your insurance. Â
Hiring a professional builder
If you choose to hire a professional builder, you will need to make sure they are fully qualified and that they have the right insurance. They will need to have at least worker’s compensation insurance, public liability insurance to cover any damages or accidents and home warranty insurance if your renovation value is over $20,000 (NB: this threshold applies to NSW; if you live in another state, check the home warranty threshold for your state).
If you fail to check your builder’s qualifications, licences and insurance upfront, it could also meant that your insurance cover will be void.
Types of Renovations and Additions
There are many types of renovations and additions that you may choose for your home. Anything that adds substantial value to your property will be most likely to affect your insurance. This can include:
- Extensive renovations, such as building a second storey or extending the size of the house
- Renovating or installing a new bathroom
- Building a new pool
- Installing a veranda, deck or patio
- Upgrading your outdoor areas
- Building a new shed, garage or carport
- Upgrading your built-in appliances, such as dishwashers, stoves, ovens, rangehoods, clothes dryers
Check your current policy
Before you start building, it’s a good idea to check your current home insurance policy to see exactly what you are (and aren’t) covered for. For example, are you covered if your home is damaged or items are stolen during the construction period? Does your policy include protection for certain types of building materials or will you need a higher level of cover? Does your policy protect you if you damage someone else’s property (e.g., a neighbour’s) during the renovations?
After the renovations
Once your home has its new additions in place, you will need to work with your insurance provider to upgrade your cover. This means your policy needs to be amended to match the new (and hopefully higher) value of your home.
However, you should remember that obtaining a higher level of insurance cover may also mean your premiums increase. You will need to consider your home insurance costs in your overall budget and whether, once your renovation is done, you have sufficient funds to support your increased premium payments.