Renovating? Call your insurer
Category Helpful Hints
You've redone the kitchen, knocked out a wall or two and turned the second bathroom into an en suite. But, before you wipe the construction dust off your hands and prepare to enjoy your newly renovated home, don't forget to pick up the phone and call your insurer. Bond origination firm ooba warns that failing to keep your insurer in the loop about any renovations you've made to your home can leave your property underinsured. Craig Young, Ooba's national manager of insurance sales, says the cost of buying a new home can increase quickly once bond fees, registration costs and moving are all taken into consideration. "As a result, many people choose to renovate their existing property, however, few people realise the importance of telling their insurer of the work being done," he says. "When you are carrying out any serious work to your home, it is vital to contact your insurer to ensure your coverage is still correct." Young says homeowners get so involved in the detail around the renovations such as the planning, building, workmanship and the finishing touches, that they forget to consider the financial implications of making the necessary changes to their policies regarding the new insured value of the property. "The greater the degree of work being carried out to a property, the greater the risk of possible underinsurance," he warns. "Anyone undertaking a home renovation project should, therefore, ensure that they have their property valued afterwards to determine whether their insurance policy is still adequate in the event of needing to make a claim," says Young. A property insurance policy should not be calculated on what someone paid to buy their home, but rather on what it would cost to rebuild the property to the same standard. Young provides the following advice to consumers: Make sure you tell your agent/broker about improvements to your home. It is possible that your current policy will sufficiently cover any minor redesigning work being done, but it is safer to call your broker and tell him/her about any renovation plans you may have for your property. Once the renovations have been completed your broker will be able to do a full analysis and provide you with the correct cover to protect your home and newly acquired assets. Appoint an external valuator. Another option is to appoint an external valuator to provide a comprehensive sum insured replacement analysis on the property and its contents. The risk of under-insurance. If you buy a property for R1 million and you have extensive renovation work carried out, then the property may be worth R2m. However, if you do not update your insurance policy with the new value, then the property could be under-insured by 50 percent. As a result, the insurer will only pay out on half of any claim. The common term for this is "average". "Get your property formally evaluated every couple of years by a qualified valuator or broker to avoid the insurer applying 'average' to a claim due to under-insurance," advises Young.