Home insurance for renovations
Don't take the risk – find out how to get home and contents insurance while renovating.
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You need home insurance while renovating because your home is less secure than usual, making you more vulnerable to theft. Small mistakes can be costly.
Some providers will exclude cover for any renovation work, others might offer an increased level of cover for an additional premium, and many will not cover you if the renovation project is valued at over $50,000. Luckily, you have a few options.
Does home insurance cover me for renovations?
In most cases, there are two types of policies needed to adequately cover your project: home and contents insurance and builder's insurance. If you are the builder or DIY renovator, then you will need to take out builder's insurance in addition to home and contents insurance.
If your policy doesn't cover you for renovations, it shouldn't necessarily put a stop to your plans.
Some insurers might be able to offer an increased level of cover for an additional premium. If your current provider refuses to cover you, you can look to change providers. Alternatively, some insurers allow for the builder's insurance to be extended to cover the entire home, meaning it can work as a replacement for home insurance during the renovation period.
Keep in mind that if your renovation project is valued at over $50,000, you may not be covered. The majority of home and contents policies will not cover you for any renovation project that is valued at over a set amount, often capped at $50,000. Renovations valued at over $50,000 will categorise your home as a building site and often, your legal liability cover, which protects you if someone gets injured on your property, will also be compromised.
Compare home and contents insurance side-by-side
Insurance for small renovations
You might still be covered with standard home insurance for renovations that are minor. 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.
To be sure you are covered, always read your product disclosure statement (PDS) beforehand 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
Home and contents insurance while renovating gets more complicated the bigger the job gets. Here are some key facts you need to be aware of:
- Vacancy can void your policy. Living through a renovation can be a nightmare and many of us consider moving out while renovating. However, some policies will become void if your home is vacated for longer than a specific amount of time. If you're thinking about moving out while you upgrade your kitchen and bathroom, you may need to think again. Some policies can lapse after just 60 days.
- You must tell your insurer that you're renovating. If you don't notify your insurer of your renovation plans, your policy may become void, meaning that 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 and some even require you to list any building works as an added extra.
- You might need builder's insurance. DIY renovators need extra cover as most policies won't cover homeowners undertaking their own renovations. If you are undertaking any part of the renovation project yourself, or coordinating as a project manager, then you may need builder's insurance on top of your home and contents cover. It's best to check with your insurer to see what they say. If you aren't doing any work yourself, you need to make sure your contractor has builder's 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 is a type of specialist insurance tailored to those having difficulty getting cover. However, because it's relatively new, it's hard to say if it's good value yet.
Will insurance cover me for damage that contractors cause?
If you are able to get the required level of coverage from your insurer, then you should be covered for damage or loss that contractors cause B.e 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 of time.
In most cases though, you will have to rely on builder's insurance. If this is the case, make sure that your builder has insurance cover in case your home is damaged due to renovation work.
Speak to your contractor and their insurer as well, as it's often the case that builder's insurance will only cover the portion of the home they are working on. To extend the builder's coverage temporarily to a third party, you will probably need to pay an additional fee.
How much do I need to change my sum insured after a renovation
Your policy will be affected if the value of your home changes after a renovation. Once your home renovation project is complete, ideally the value of your property should have risen by a significant sum. Therefore, you will need to revise your home and contents insurance policy to ensure that it reflects the new value of your home. If your home is underinsured and an incident occurs, it can leave you severely out of pocket.
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