Q2: Does the policy cover Public
Liability claims for removal
or weakening of supports or
foundations?
Insurer A – NO, never
Insurer B – NO, never
Insurer C – NO, never
Notes on Q2: Ok, it seems like the
message is loud and clear on this one.
Other types of liability claims might be
covered by some of the insurers if your
project value is under their rather modest
limits, but they all agreed that they don’t
want to touch any liability claims arising
out of damage to a neighbour’s house
caused by vibration or excavation.
To decide if this is a real problem for
you, answer the following:
Will you be a) doing any excavating,
b) doing any compacting, c) having any
trucks or other heavy machinery visit
the site, d) constructing a retaining wall.
If you said ‘no’ to all the above, you
might be okay on this point. If in doubt,
you need construction insurance.
Q3: Does the policy cover any loss or
damage to your home as a direct or
indirect result of a renovation?
Insurer A – NO
Insurer B – This one looked like it would, in some very limited cases
Insurer C – NO
Notes on Q3: Two of the policies
specifically excluded this. Insurer B
did not spell it out, but you’d still have
a number of problems. For starters,
Insurer B’s policy stated that cover ceases entirely for any section of the
house that
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is undergoing renovation.
How that is applied in a practical
sense… your guess is as good as ours.
Additionally the policy’s Duty of
Disclosure would require that you
informed your insurer before starting
the renovation. Due to this change of
circumstances they might conceivably
even withdraw cover.
If the policy continued it would also
be on the basis that any and all security
measures (alarm, key locked windows,
deadlocked doors, etc) that were a
requirement of the policy originally,
continue to remain intact and working.
For most projects this becomes tricky.
As the home owner I’d prefer it if
Insurer B had just said ‘no’ like the
other two, so that I understood clearly
(without the extra digging) that I
needed additional insurance.
Q4: Does the policy cover new
structures that are not yet complete?
Insurer A – This one looked like it might, to some degree
Insurer B – NO
Insurer C – NO
Notes on Q4: Insurers B and C
made it clear that your new structures
aren’t covered until your project is
finished and you then update your
policy to include cover for them. Insurer
A remained silent on the topic so we’d
assume that you would be covered
(subject to any of the other limitations
and/or exclusions under the policy).
What’s not covered
What you should have taken from
the above exercise is that during the
course of your extension or renovation
project the following things are not
likely to be covered by your regular
house and contents insurance policy:
public liability claims, new structures,
building materials, and even your
existing house and contents.
Putting that slightly cynical summary
aside, there certainly are some major
concerns as I’m sure you’d agree. And
we’ve only touched very lightly on some
of the bigger problems.
So what’s the solution?
Take out appropriate insurance!
Some providers of this insurance
use two separate names for this type of
cover; Owner Builder Insurance – for
those constructing a complete house
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Even a relatively small renovation may need
insuring, especially if structural work is needed.
from scratch, or Renovators Insurance
– for alterations and additions to an
existing house. Most providers however
do not make this naming distinction,
instead catering for both these types of
project under the one banner of ‘Owner
Builder Insurance.’
Basic cover
The most basic form of owner
builder insurance will cover: public
liability, any new structures you are
erecting, and building materials.
We strongly advise you to take out the
above insurance as an absolute minimum.
The down side is that it won’t provide any
additional cover for the existing house,
which you’re likely to need.
Including cover for existing house
This is the recommended solution.
It offers the same cover as above, but is
also inclusive of cover for the existing
structure.
Some owner builder insurance
policies will provide the ‘existing
structures’ option as a partial cover
(i.e. damages arising directly from
the project). Check if this is the case,
because some other owner builder
policies can provide full cover for
the house at roughly the same cost.
Depending on how much your existing
policy is going to exclude, you may need
this extra level of cover.
Mark Adams has several years
experience as a specialist broker for
Owner Builder Insurance Australia-wide
and can be contacted on 1300 255 747 or
marka@westcourtgeneral.com.au. Alternatively
for an obligation free quote go to
www.allrisk.com.au
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