The Insurance Council urges property owners, builders and developers to pay particular attention to building site security. Often, if you are still living in your home while the building work is ongoing, theft risk is greatly reduced.
There is a tendency for homeowners to overlook builders' risk insurance when renovating. Some insurers provide a small extension in cover under the normal household policy, but this cover is often limited and is really for the homeowner who does their own maintenance.
Significant renovations need to be advised to your insurer in advance so that a builders' risk insurance policy [also known as contract works] can be arranged. The insurer will normally ask you the following questions:
What is the value of the building work? How long will the building work take? Who are your builders or contractors? What are the construction, building consent, and engineering issues?
Insurers will also want to know about any excavation work that may be involved in your project.
Your insurance company will then issue you with a policy, which should be in joint names of you, as the owner, and your builder. This ensures that both you and your builder are jointly insured.
Your mortgage lender may ask you for their interest to be noted on this policy.
When doing your renovation you have to consider liability insurance in case your building works damage neighbouring properties.
For instance you might have loose building materials blowing around or, at worst, part of your construction could collapse on your neighbour's property.
The recommended steps are:
* Make sure your builder has public liability insurance of at least $1 million.
* Ask for a copy of his public liability insurance certificates before you sign any agreements.
* When you discuss the builder's risk insurance with your insurance company, ask for a separate liability policy that will act as a back-up to your builder's liability policy not responding to a liability claim. This can happen. Liability policies do have exclusions, or your builder could inadvertently void his own policy.
Builders' risk insurance covers damage to the building works, but will not cover faulty workmanship or bad design. Ensure that your builder is qualified and that building work has got your council's approval.
Once your home or renovations are complete take care not to under-insure the house or its contents. Home insurance can be arranged in a number of ways, either sum insured current day value, sum insured replacement, or total replacement to current square metre size.
Home contents insurances are usually overlooked. Homeowners discover that their contents policies fall short when they are unfortunate enough to suffer a fire loss. Even though the fire may only be in one room of the house, usually all the contents of the house suffer irreparable smoke and water damage.
The Insurance Council estimates the average value of contents in the average home in New Zealand is between $60,000 and $100,000. Some contents policies provide replacement cover, so the sum insured needs to be adequate for total replacement.
CHRIS RYAN - Chief executive of the New Zealand Insurance Council
www.icnz.org.nz
