the reason insurance hadn’t already
been put in place.
‘So it’s no big deal if I forget to get
insurance, right?’
Wrong. Don’t let the fact that
you MAY be able to get cover at any
stage of the project make you become
complacent. Firstly, when you do obtain
insurance it will cost you the exact same
amount as if you’d had the policy right
from the start (so you may as well have
it from the start). More importantly if
something does go wrong before you get
the cover in place you WILL NOT be
covered, even if you take out insurance
immediately after.
Ideally, if you haven’t started your
project yet, get the insurance in place
before you commence work. If you
have already started your project get the
insurance in place as quickly as you can.
3. Covering your contents
As discussed in the earlier article
‘Renovators Insurance’ in TOB 150
Dec 08/Jan 09, if you are renovating or
extending your home you may either
seriously compromise or even invalidate
your existing home and contents
insurance cover.
The solution is quite easy for
covering the home itself; you simply
add the optional cover onto your owner
builder insurance policy for ‘existing
structures.’ This will either cover you
just for damages to the existing house
that arise from the construction work,
or with the better policies will provide
full cover for the existing house. Note:
This subtle difference becomes very
important if your project causes your
existing house and contents policy to
cease altogether or become invalid. |
But what about the contents?
This has always been a more difficult
problem to solve. In the majority of
cases your existing policy will only
be compromised and not completely
invalidated, so you will at least retain
some cover from it. This may not sound
good, but it is often as good as you’ll
get. Refer to the article in TOB 150 for
more in depth discussion on this, but
in brief the main things you will not
be covered for will be loss or damage to
contents if:
a) caused by the construction work,
even if indirectly
b) arising from compromised security
due to the project. i.e. removing a
wall, door, window, etc.
c) caused by water entering through an
opening made as part of the work.
i.e. removing tiles from the roof.
In many cases your insurer may
simply have a threshold limit on
renovation work, beyond which your
existing policy will afford you no cover
at all.
There are three possible solutions:
• Find another standard contents
insurance policy that has higher
threshold limits before cover ceases.
This will still have the same limited
cover as described above but will at
least afford some cover instead of
none at all.
• Go without cover on the contents.
This may sound silly but it is viable
in some cases where you may be able
to remove all or most of the contents
from the house to another location.
• Choose an owner builder policy that
has a ‘contents’ add-on available.
This is a new arrival in the insurance
market that has not been readily
available previously.
4. Public Liability Only
Within this article, and just
about anywhere else that you can
find information on owner builder
insurance, you will see mentioned that
the most important cover required for
your owner builder project is public
liability. As a result, many owner
builders seek to obtain a quote on
‘public liability only’ cover, which
traditionally has not been available.
Its important to point out that the
fact that it has not previously been
available is for a very good reason. |
There are not many owner builders who
could afford to pay for their projects
twice over, which is precisely what they
would need to do if they suffered a
major material loss while uninsured, or
if insured only for public liability. So
while it is common for owner builders
to ask for an option on ‘public liability
only,’ in most cases they very quickly
realise that this is not what they want
at all.
But what if you really do want ‘public
liability only’ cover?
Whatever the reason, most insurers
will not offer this at all. This causes
another problem however. At the
smaller value end of the renovation
market there are some owner builders
who are both willing and able to self insure
the material loss or damage
part of their projects, and thus do
legitimately just want public liability
cover. In these cases it is important for
the owner builder to remember that
they may also be effectively self insuring
the full value of their existing house if it
were to be damaged during the project,
in cases where this damage would not
be covered under their existing home
policy.
‘Public Liability Only’ cover is now
available, although the sources are very
limited. If you receive a quote for this
you must consider the above issues
and think twice before taking up this
option.
The great news is that the insurance
market for owner builders has now
matured to the point where just
about any owner builder can get
insurance at whatever level of cover
they require and whenever they require
it. The owner builder still needs to
remain focused on minimising and
managing the risks, and taking out
a good insurance policy. Remember
that a professional builder would not
consider doing your project without
the right insurance, since the financial
risks are substantial. Think of yourself
as a ‘builder’; cover all the bases and
speak to your owner builder insurance
expert today.
Mark Adams has several years experience in
the owner builder insurance market. He is
an insurance adviser with AllRisk Pty Ltd,
an authorised representative of Westcourt
General Insurance Brokers (AR 12345), and
is also a specialist provider of owner builder
insurance Australia-wide. 1300 255 747,
www.buildmate.com.au
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