Renovating your home or investment property is an exciting time, whether you are creating a better space to live or improving investment opportunities. However, homeowners can get caught up in the build that they forget to look at what is covered by their home and contents insurance.
The first step is to identify what kind of builder you are using, this is important as the different types incur different warrantees. For owner builders, no warranty is required whereas a registered builder will be required to supply you Warranty Insurance on signing the building contract.
Homeowners must inform their insurer that they are planning on renovating a property. If you fail to do so, the insurance for that property may become void, meaning in the event something happens during the renovation, you will not be covered. Some insurance policies also require you to be living in the property for the insurance to be valid. Therefore, if you are relocating during the renovation period, check on the living requirements for your policy.
Home and contents insurances are designed to cover existing homes, not building sites. If the renovations are valued at over $50,000, your home will be categorised as a building site and further insurance will be needed.
Your policy will also be affected once the renovations are finished if they have increased the value of the house. Being underinsured can leave you out of pocket if you need to make a claim. After renovations are completed, homeowners should revise their home and contents insurance again to make sure everything is up to date and compliant.