Does home insurance cover renovations?
What about contents?
Who arranges insurance for pre-existing property which is part of the home that is not being touched by the renovation? For example: walls could be replastered but the structure is pre-existing during building works?
This is a question regularly posed by both builders and home owners alike and the answer is really quite simple. It is the responsibility of the property owner to effect and maintain insurance on their own property. Unless the building contract states otherwise.
It’s vitally important that both the builder and the property owner sort this matter out prior to the works commencing. Because if it isn’t and the owner’s property is damaged, a dispute is almost certain to follow. This of course is a predicament neither party wants.
What do I need to do?
Tip 1 – Home owners should ring their Home and Contents Insurer and explain the situation, will they continue to cover the existing house and contents during the renovation?
If the answer is Yes, make sure you get it in writing. If No call us to organise cover for you.
To avoid this happening, both parties should start by checking the insurance clauses in the building contract. These clauses will clearly set out who has what obligation to arrange the various insurance policies needed. If the contract is silent in respect of insurance for pre-existing property, it will be the property owner’s responsibility. This is how it was prior to the works due to the fact that the building contract has changed nothing in this regard.
The most common contractual requirements however, are shown below.
| Policy type | Summary of cover | Responsibility |
| Construction Works | Comprehensive cover for damage to the works in progress. It is important to note that this policy only covers the new works, not other property at the site unless it is specifically extended to do so. | Builder |
| Public Liability | Legal liability for third party personal injury or property damage, including the builder’s liability to an owner’s property (but take note of the issues below). | Builder |
| Owner’s Property | Depends on whether the owner’s current Home and Contents policy on the property is maintained, or the owner organises cover by extension of the Builders construction works policy. | Owner |
It is recommended that if these obligations are adhered to, possibility of uninsured damage and a subsequent dispute unlikely.
It happens all too often, both builders and owners mistakenly assume that the builder’s public liability policy will be sufficient to protect the owner’s property. Due to the policy covering the builder’s liability for damage to third party (which includes owner’s) property only.
As the name implies, public liability only insures the builder’s legal liability to it and it does not automatically follow that all occurrences (claims) of damage will be determined to be the liability of the builder from a legal perspective.
Please note:
- If the owner’s insurance company will not assist with appropriate cover for the owner’s building, we can usually help. Availability of insurance for owner’s contents on site will depend on the particular circumstances involved.
- In situations which a building is vacated by the property owner and put into the care of the builder, the above issues may be changed. Should this be the case, contact us to discuss the specific position and subsequent insurance needs.
Tip 2 – When to notify your Home and Contents Insurers is a condition of your Policy when renovating.
Speak to your Builder and enquire to have your Pre-Existing Property endorsed to their existing Construction and Liability Policy. Or get your Builder to give us a call on 1300 763 016 for us to arrange for you.
