How home renovations affect your insurance

With property being so expensive, and banks not giving out home loans easily, many people are looking at renovating rather than moving. But how do these renovations affect your insurance?
 
Chief executive of distribution at PSG Insure, Bertus Visser, stressed: “If you are planning home renovations, it is essential to inform your insurer that your policy remains in full effect during this time.”

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Ernst Gouws, CEO at OUTsurance, added: “It is important that we are informed of all renovations at the client’s OUTsured property as the changes being made to the property may affect the cover we provide and the premium charged.”
 
One condition that some insurance agencies insist on for a home insurance policy to be in place, is that the house is occupied.
 
Therefore, PSG Insure suggests that, if during the renovations you have to leave you house for any extended period of time, you should inform your insurance company and ensure that this will not affect your cover.
 
The value of your home
 
Depending on the renovations that you make, for example upgrading your bathroom or kitchen, your monthly insurance premiums may increase, as well as the insurance cover that you require.
 
This is because the value of your house can increase in relation to the type and extent of the renovations that you make.
 
Visser said: “Make sure you inform your insurance company as soon as possible of any significant upgrades.”
 
Building under construction
 
According to PSG Insure, if the renovations include large changes, such as replacing an exterior wall or building on, your insurance company may reclassify your policy to ‘building under construction’.
 
“If there's only half a roof covering the lounge or if the master suite has a wall or two missing, it could affect the condition of the contents of your home, which are also covered by your insurance policy,” said PSG Insure.
 
Gouws stated that the policy won’t change during the renovation process, however, certain exclusions may come into play.
 
“[For example,] if your roof is part of the renovated area and it is only partially covered, there will not be any cover for natural perils such as storm or hail,” he said.
 
Further exclusions may arise if the property is being extended. For example, “exclusions around visible signs of forced entry and unroofed structures may apply,” added Gouws.
 
Another thing to consider when renovating your home is the safety of the people on your property.
 
Visser noted: “If a worker or anyone else is injured while work is carried out in or around your house, you may be liable for costs and damages relating to injuries.”
 
However, Gouws states: “Any injury sustained by the contractors and/or their employees would generally not fall within our client’s liability and would usually be covered by other legislation such as: The Occupational Health and Safety Act [and] The Compensation for Occupational Injuries and Diseases Act.”
 
The contractor
 
Visser highlighted that it is important to make sure that your chosen contractor has adequate insurance for their workers.
 
Gouws agreed, adding that contractors need to ensure that their staff are covered by the Occupational Health and Safety Act and the Compensation for Occupational Injuries and Diseases Act.
 
PSG Insure stated: “Using a reputable building contractor may save you from extra insurance costs due to incomplete or faulty workmanship.”
 
The building plans
 
Finally, it is vital that your building plans are approved by all relevant parties. PSG Insure noted: “[Your] insurance company could repudiate your claim if your building does not conform to the required building standards and laws.
 
“This is vital for all properties, and even more so for properties close to rivers, beaches and dams, as the 50- or 100-year flood line could have an effect on the approval of building plans. You could also end up with a nasty liability claim from neighbours should your plans not be in accordance with building regulations.”
 
The insurance policy
 
Gouws reiterated the importance of informing your insurance company about any changes you make to your property through an example.

“Our client’s building has a slate roof for which we charge a specific premium.  If you later thatch the roof without telling us, we would be receiving the incorrect premium because thatch has a greater risk of fire damage.  Our client’s building will therefore not be covered for fire damage.”
 
He added: “When your property is being renovated, the risk increases significantly and the necessary precautions need to be taken. Ensure that you understand the exclusions on your policy as well as your responsibilities to ensure sufficient cover.”
 
Visser advised: “Once your upgrades are complete, make an appointment with your insurance adviser as soon as possible. Talk about the changes and discuss whether your insurance cover needs to be altered.”