Building or Renovating?

Owner Builders are you fully covered? Protected? Insured?

Bushfires focus a lot of attention on whether owner builders have adequate or even have Construction and Public Liability insurance in place. 

During the latest summer bushfires, we were inundated with calls from owner builders/renovators seeking insurance, in a lot of cases it was too late as insurers had placed embargos on a number of postcodes.  If you were in the path of the bushfire, had neglected to take out Construction and Public Liability Insurance and now your home was uninsured, and the fire was coming. 

This was a terrible situation, but one that could have been avoided by taking out Construction and Public Liability insurance before starting, and there are other risks you need to be aware of to ensure maximum protection. 

• Under Insurance – what do you mean? 

If you underinsure eg: this is what will happen if you have a claim, based on a $400,000 build. 

If your sum insured is only 50% ($200,000)  of the value of the property required to be insured at the time that the insured damage occurs, the insurer will only cover a proportional amount of your loss, as set out below: Full Insurable value $400,000 Sum insured $200,000 (I.e. 50% of the full insurable value) 

Amount of your loss $200,000 Amount the insurer will pay $100,000 (i.e. 50% of the loss) less any Excess.  This means you will be responsible for 50% of the loss you suffer (as well as any applicable excess) because your sum insured was only 50% of the value of your property required to be insured. 

According to the Insurance Council of Australia four out of five Australian homeowners don’t have enough insurance to cover the true value of their home and contents should disaster strike.  In the current Senate Committee on the bushfire season it was noted that many properties were significantly under insured. 

• Not reading or understanding what cover, the insurance offers. 

Some online quote and buy systems lead you to believe you are covered as they ask only 3 to 4 basic questions, however once you have paid you find out, if did not  e.g.: include the existing home or undervalued it. 

So where would you be if you paid on a Saturday and found out , say on Monday that your project was outside the insurers guidelines and therefore you actually had no cover and you had a burglary over the weekend? 

Read the small print! 

As well as checking the above we would also recommend that you ask the following questions before buying Owner Builder Construction and Public Liability Insurance. 

• Will my tools be covered? 
• If I store materials offsite are, they covered? E.g.: tiles 
• Can I extend my policy if my works run for longer than a year? 

• Will I be protected, in the event of legal action as the result of the subbies actions? 
• What is the excess? 
• Does it cover Flood? Storm damage, rain and hail? 
• If I am renovating, are my contents covered? 
• Am I covered for Vandalism, theft and burglary? 

CHECK, CHECK, CHECK and ask questions to make sure you have the best value for money policy to protect you and your families wealth and greatest asset.