A safe and workable solution is not as straight forward as some make out, because all insurances contain a powerful, overarching claim denial clauses applying the near in-defensible assertion that duty of care includes the condition that premises are secure, safe and water tight at all times, and invited guests (including sub-contractors), trigger claim Exclusion clauses.
Most Home and Contents Insurance Policy’s exclude building cover once renovation or construction activities exceed a small sum (say $50,000). Budget or discount type insurance policies are less tolerant when undertaking construction activities and automatically trigger broad Policy Cover Exclusion.
Insuring existing structures during these renovation and construction actives is standard industry practice, albeit some insurers impose premium surcharges and reduced cover. Good quality insurers, such as Qtrust Insurance partners, simply apply ‘like for like’: House Insurance morphed and extended into Construction Insurance.
Moreover, given renovators and owner builders make personal and practical choices whether to continue residing in their home during works or move out: often for short periods whilst main structures are under construction. Unoccupied residences, particularly when construction works are underway and exposing open roofs and unlocked windows and doors, also trigger broad Policy Exclusions. The thought of sub-contractors, apprentices, delivery personal and even neighbours walking in and out, is enough for a home owner to raise sweat. So what about protecting contents and appliances from damage or theft?
A safe and workable solution to this problem is not as straight forward as some make out, because insurances contain a powerful, overarching claim denial clause by applying the near in-defensible assertion that duty of care includes the premises are secure, safe and water tight at all times. Only foolhardy sales clerks wipe these critical matters aside with no awareness or consciousness of the damage or risk they cause home owners.
Therefore home owners should carefully review their Home & Contents Product Disclosure Statements and refer particularly to the Exclusions section for cover when constructing or renovating. If unsure then call on a professional insurance broker for advice.
For reference sake, Home & Contents Insurance is a ‘prescribed insurance’. In other words policy holders are protected and guaranteed cover under consumer protection and legislation. In our practice, we discourage owner builders from relinquishing their Contents cover and protection under the Insurance ACT and consumer safeguards. This is not in our client’s best interest.
Construction and Renovation Insurances are designed to protect an owner builder during building works, and is extendable to include cover to existing structures, but not Contents.
How to retain Contents Insurance when undertaking renovations and building works to an existing home?
Should construction works not interfere with structures and no impact to water tight and secure premises, and the home is occupied, then a quality Home & Contents insurer will continue to provide effective cover.
Should the proposed construction works expose internal structures to weather condition and transform the residence as unlivable or in-secure, then the owner builder may opt for the following solutions.
- possible transform and secure parts of the residence which are not subject to the construction works as secured areas, and store valuable in this area.
- Remove valuable and electronic equipment to safe houses such as friends and family.
- Store contents in secure and reputable off-site storage facility.
- Rent on-site secured storage boxes or steal shipping containers with locks.
- Secure doors and windows each night.
- Secure the site with safety fences, CCTV, alarms and security.
The worst option for an owner builder is to accept construction insurance with a contents cover included. Alarmingly because they are two very different insurances, under two separate and distinct parts of the insurance ACT, and subsequently an owner builder relinquishes their consumer rights such as accidental damage, sub-contractor actions damage or burglary, water damage and theft. Recent industry investigations found no Product Disclosure Statement accompanied the offer to accept this type of insurance.
Owner builders have options, but whatever option it will expose some risk. In our professional view, we encourage our clients always to act with risk aversion at the core. Poor, loosely defined insurances is a waste of time and money and ultimately will not respond to a claim when you need it most. But then it’s too late!
Categorised in: ACT Owner Building, Commercial Property Insurance, Contents Insurance, Granny Flat. Garage. Shed., Landlord Insurance, NSW Owner Building, Owner Builder Insurance Cover, Owner Builder Tools, Queensland Owner Building, SA Owner Building, Tasmania Owner Building, Victorian Owner Building, Voluntary Workers. Personal & Accident Insurance, WA Owner Building
This post was written by Technical Underwriting Centre