Many families are having to contend with changing family and work structures such as taking care of elderly parents, grown children staying home for longer and working from home. These lifestyle changes are fuelling an increase in home renovations in a bid to contend with rising economic pressures by renovating and upgrading existing premises or building a new home for your family.
“The increased value that a renovation brings to your property and insured value is one of the more obvious implications, however, there are a host of important construction considerations and risks that need to be factored into your insurance planning. Once you have set wheels in motion with your architect, it’s important to schedule a call with your insurance broker to get a better understanding of potential risks you may be faced with, and to put measures in place to manage them,” explains Mandy Barrett of insurance brokers and risk advisors Aon South Africa.
“When renovating your home, you may be making material changes to the structure of the building as well as the usual security conditions you have in place. These changes can impact the risks that you are insured for. It’s essential to advise your broker of the change in risks to identify any potential risks that will have a material impact on your insurance cover not only during the renovation period but also once complete,” she adds.
Aon provides the following important tips to consider when renovating or building your new home.
Registered Builder
Make use of a reputable building contractor that is registered with the National Home Builders Registration Council and builds according to national building regulations. Having your builder disappear halfway through the project with your money, or a structure collapsing due to faulty workmanship and design won’t be covered by your insurance. It’s always a good idea to contact references and the builders’ association to do thorough background checks.
Plans
Have your plans for the building project drawn up by a reputable architect or draughtsman and ensure that all plans have council approval prior to the commencement of your project. This will include an inspection of the building sites by municipal inspectors to ensure that the minimum standards of health and safety are adhered to and that such alterations and structures comply with all necessary bylaws.
Temporary storage
Removal of household goods to a temporary storage facility results in a change in risk. It is important that you notify your broker to arrange the most appropriate cover to meet your needs, including cover for transit between the temporary storage facility and your main residence.
Rising damp is an issue often found in residential buildings
A damp-proof course, laid at the time of construction, prevents dampness from the ground from rising into the walls and floors, damaging your property. Make sure that this step is properly adhered to during your building project.
Fire, natural causes, and other material damage happens
You will need to be covered for your property whilst under construction. In addition to your homeowner’s policy, you (or your contractor) will be required to purchase Contractors All Risks (CAR) cover.
More about Contractors All Risks Cover
Contractors’ All Risks (CAR) insurance covers material damage to the works under construction and can be extended to cater to third-party property damage and injury losses. The policy is designed in such a way as to ensure that all such parties are indemnified for loss or damage to the property insured caused by sudden, accidental and unforeseen incidents such as but not limited to fire, flood, storm, wind, earthquake, water damage, accidental damage, including negligence. There is indemnity to third parties, which may be injured while at the construction site.
The policy can be extended to include some of the covers below:
- Claims preparation costs – Costs incurred in the preparation and submission of a major insurance claim.
- Surrounding property – Covers property in the care, custody, and control of the contractor in the execution of the works as stipulated in the contract.
- Transit limit – Loss of or damage to the insured property whilst in transit to the contract site.
- Professional fees – Professional fees incurred by architects/surveyors/engineers etc., in connection with the repair of damage to or replacement of the works.
- Theft and malicious damage – Theft or loss/damage caused by malicious intent.
- Removal of debris – Reimbursement for clean-up costs associated with damage to property.
- On- and off-site storage – Loss of or damage to property insured whilst in off-site storage.
- Removal of support – Removal of support from third-party property/buildings/structures
- Public Liability – Covers the Insured in respect of damage to third party property, or injury to or death of a third party, arising out of the performance of the contract works at the contract site.
- SASRIA – Damages caused by special risks such as politically motivated malicious acts, riots, strikes, terrorism and public disorders.
Security
Always do renovations to your home with security in mind, as you would need to comply with security requirements stipulated by your insurer. Advise your broker of your building plans so that you can make an informed decision when incorporating the necessary security measures into your building such as burglar bars, and gates and extend your alarm system to cover the new additions. If walls are coming down or your roof is coming off during the build, hire additional security to protect the premises at night. Also, be cognizant of the influx of people that will have unfettered access to your premises during the build.
Update your insurance policy
Once your renovation is done, check with your broker that your homeowner’s policy reflects the new updated replacement value of your renovated property to avoid being underinsured.
“It is essential to talk to a professional broker who can advise you of all aspects to consider and any material risks to be aware of during your renovation so that you are able to minimise both the risks and the stress that come with the temporary upheaval to your home and routine. Careful planning ahead of time and a consultation with your broker will go a long way in avoiding the potential for any uninsured renovation risks becoming a financial crisis for you,” concludes Mandy.
