How to plan your home insurance for renovations
Before ripping out your old carpet, or painting your bedroom that bright turquoise shade you always wanted, think about whether your home’s insurance cover will be affected by your reno.
Are renovations covered by home insurance?
AAMI Home Building Insurance provides you with legal liability cover for up to $20 million for any injuries to other people – or loss or damage to their property – at the insured address when the total cost of extensions, alterations, or renovations are less than $50,000. Please contact us prior to building, construction or alteration commencing at the insured address.
We also insure uninstalled building fittings, fixtures and materials to be used for the building, but only when kept in a locked and secured building at the insured address.
However, Home Insurance will NOT cover items such as:
- loss or damage to the home arising from building, renovating or altering the building (except for spilling paint)
- loss or damage caused by storm or flood to any part of the home not fully built or under renovations,
- theft or damage by someone who enters or leaves through an unlockable part of the building under construction, and
- loss or damage to any part of the building not renovated in compliance with building laws and regulations.
See our PDS for the full conditions, limits and exclusions.
What if I've employed a tradie?
Many tradies have their own insurance to cover damages caused during reno, so inquire about their cover before hiring them. Check if their cover extends to the whole house or just the portion being renovated.
What if my home is unoccupied while renovating?
Some renos may require you to move out of your home for an extended period of time.
With AAMI Home Insurance , if your home has been unoccupied for more than 60 consecutive days – and you need to make a claim for an insured event such as storm, flood*, and fire damage to part of the house not under renovations – an unoccupied excess may apply. Plan your reno to avoid reaching this limit if possible.
What if I'm doing a DIY renovation?
You’ll be in charge of the entire process, so it’s helpful to create a renovation planner and set clear goals from the beginning to avoid dealing with major mishaps later on.
Damage caused by renovations are not covered. However, having the Accidental Damage at Home option on your AAMI policy will cover for some accidents unrelated to the renovations, such as spilling paint on your new carpet or accidentally damaging your TV while moving about.
Why it’s important to accurately value your home
Renovations will probably add value to your home, so estimating its worth as accurately as you can is essential. Underinsuring may lead to significant financial loss if you need to make a claim, while over-insuring could have you paying an unnecessarily high premium.
Factors that affect your home’s replacement value
Some key factors that may affect the cost of repairing or rebuilding your home include:
- features and quality of fittings, and
- market conditions for trades and materials.
Unsure how to calculate your home’s replacement value? Try the AAMI Home Building Calculator, which allows you to estimate how much money you’d need to rebuild your home from scratch. Alternatively, seek an opinion of a home builder or other qualified person.
What to let your insurer know
Before starting any renovations, be sure to give your insurer a call and let them know your plans, the complexity of the building works, and its estimated value.
When you plan to commence activity
Let your insurer know the start dates and how long you estimate the renovations will take. Call back once complete.
Change in sum insured on your policy
Now that the kitchen has been revamped and the new floorboards are in, consider contacting your insurer to update the sum insured on your policy. This amount is the most we will pay for any one incident – and it needs to reflect the increased replacement costs so as to avoid your home being underinsured.
If you have the optional AAMI Complete Replacement Cover on your policy you won’t need to update your sum insured, but you’ll still have to contact us to advise the reno has finished.
Other things to consider while preparing for a home renovation
Can renovations cause damage to existing property?
Accidentally knocking a hole in the wall or breaking a floor tile is always possible, but the best way to manage potential risks is to take preventative measures – such as covering furniture and using drop sheets for floors.
If you’ve employed tradies, be present and supervise the renovation works if possible.
Will your home be secure the whole time?
A house under renovations may attract opportunistic burglars, so take extra steps to protect yourself and your property, such as:
- ask a friendly neighbour to check on your home when you’re away
- turn the lights on if the property is unattended, and
- put up a temporary security fence.
The benefits of renovating your home
Besides adding significant value to your home, additions, alterations or renovations can also refresh its look and style. Replacing windows, appliances or flooring may even increase your home’s energy efficiency.
So now, onto wallpaper colours; turquoise, lapis or cerulean?
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*Actions or movements of the sea and storm surge are not covered (unless the storm surge damage occurs at the same time as damage caused by storm). Other exclusions apply.
AAMI Home and Contents Insurance is issued by AAI Limited ABN 48 005 297 807 trading as AAMI. This advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.
The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.