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Category:
Insurance
News /
Short Term
Insurance /
August 2006
Insurance
implications for home renovations
The
long-term boom in the property sector encourages homeowners to
believe they cannot overcapitalise their houses and has fuelled an
unprecedented renovation boom
Recent
statistics show that building plans approved by municipalities have
increased by 14.2% in the first half of the year as compared to the
same period in 2005. Additions and alterations have increased even
more by 16.3%.
But
John Tyson, from Alexander Forbes Personal Services, warns that too
few home renovators understand the double-edged insurance
implications of their undertaking.
“Firstly, to make extensive housing alterations to increase living
space, people normally hire building contractors. When alterations
are being made to existing buildings the standard form of building
contract makes it the owner’s responsibility to insure the work and
any liability that may arise because of the work. Most people sign
this document without realising the insurance implications.”
Tyson cites several liabilities that can transfer to a home owner
during renovations:
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Accidental damage to the contract works – that would be damage
to the new rooms under construction
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Accidental damage to the existing structure – or damage to your
existing rooms
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Theft of building materials or fixtures forming part of the
contract
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Accidental damage to your existing household contents
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Theft of your existing contents
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Liability to a visitor who is injured on your premises because
of the unsafe nature of the contract site, for example a visitor
falling into an unprotected trench.
Even without a contract, he said, homeowners still have these risks
if you manage the alterations yourself.
Most personal insurance policies do not cover these risks and Tyson
suggests that individuals contact a broker to secure Contractor’s
All Risks and Liability cover before commencing renovations. He also
cautions that homeowners should ask about ‘surrounding property’
extension.
Secondly, once a home has undergone renovations, it is worth more so
existing insurance cover may be inadequate meaning the property
could be underinsured.
“Not only should people review their ‘bricks and mortar’ insurance
cover, they should also look at their household goods insurance as
people typically buy new furniture and fittings for new rooms and
forget to tack these onto their existing household cover.”
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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