What Renovations Can Be Covered with Insurance?

When you’re ready to renovate in Nelson, your focus might turn towards your design plans, contractors, and budget. But what about insurance during construction? There are undeniable risks when it comes to renovations – after all, your home will turn into a work site for a while! We’re here to help you understand the coverage options that best suit your project.

What is renovation insurance?

Home renovation insurance protects the part of your house that is undergoing alterations. The reward can far outweigh the home construction insurance cost. Renovation insurance is not the same as home insurance, as it only covers the part of your home that’s being renovated. These renovation types are divided into two parts:

Major alterations: These include large structural changes to your home. Think house extensions, a new deck or swimming pool, moving load-bearing walls, or a complete home transformation. Essentially, major alterations include anything that will likely require council approval. Renovation insurance is highly recommended for these types of alterations, as your home will be undergoing a lot of work. If you are building a house from scratch, renovation coverage would be considered new build insurance.

Minor alterations: These are smaller-scale, often cosmetic changes that may include projects like replacing kitchen taps, painting walls, or laying new carpet. You’ll most likely already have home insurance, which will oftentimes cover up to $50,000. So in the case of minor alterations, you may choose to rely on your home insurance instead of adding renovation cover on top of it. Be sure to check your home insurance policy first before making any major decisions.

What’s covered by renovation insurance?

• Losses or damage to the part of the house being renovated.

• Example: Your new deck is under construction and someone damages it.

• Losses to other parts of the house caused by renovations.

• Example: Flooding from a bathroom renovation that causes damage to other parts of your home.

• Loss of the materials on site that were bought for the renovation by you or the contractor. 

• Example: You or your contractor bought material for your kitchen renovation and someone broke into your home and stole it.

Some items that are not covered by renovation insurance include faults in design or materials, theft of the contractor’s tools, and damage to goods or materials in transit to or from the site.

Is renovation insurance worth it?

Your home is most vulnerable when it’s under renovation. While renovation insurance is not mandatory, it is recommended so you can get valuable protection and avoid devastating losses or damages in the long run.

What is home insurance?

Homeowners insurance is a type of property insurance that protects your dwelling. Many policies cover losses and damages to your home and any furnishings or assets inside your home.

House insurance also provides liability coverage against accidents on your property. But when it comes to renovations, the aforementioned renovation insurance is the optimal choice as policies typically have better coverage for accidents since your home will be a construction zone for a period of time.

What’s covered by home insurance?

House insurance usually covers the minor alterations up to $50,000 and:

• Damages that occur due to cosmetic changes.

• Example: During a kitchen renovation someone drops your new granite countertop and it breaks.

• Losses or damages from natural disasters.

• Example: Cyclone winds and flooding cause damage to your renovation.

What is construction insurance?

Construction insurance explained

Construction insurance protects general contractors, construction companies, and property owners. General liability insurance is the most sought-after, as it casts a wide net in terms of coverage for losses and damages.

Refresh’s top renovation preparation tips

We have four major tips to keep in mind as you prepare for your next home reno:

1. Ensure that you're covered – Make sure you have home and contents insurance before you start your renovation. This is also the time you might consider additional renovation insurance for those major alterations.
2. Keep an eye on the details – Notify your insurance company and let them know the extent of your project to see if they’ll maintain your cover. This is where you might decide to engage a renovation insurance policy to protect larger-scale changes to your home. 
3. Lock up on site – Secure your property by keeping new appliances locked away and any ladders, tools, or other equipment stored out of sight. Thefts often happen when a home is more vulnerable during a renovation project.
4. Consider more ways to protect your home –  A renovation is a great opportunity to double check ways to protect your house, whether through new locks, window latches, or fire alarms.

Review your insurance after you renovate

Chances are, your renovation will have added value to your home. Once your renovation is complete, get in touch with your insurance provider to update the sum your home is insured for, or the maximum amount that your insurance company will spend to rebuild your house in the event of a natural disaster.

It’s also worth revisiting your contents insurance to update your policy with any new appliances or pieces that you would like to protect.

What if I’m hiring a contractor to do the renovation?

Your renovation insurance can also cover what is called ‘contract works’, or all of the temporary and permanent work being performed on the insured property during the construction period. Contract works insurance in New Zealand also covers wages, freight, customs duties, and any other facets of the insured renovation.

Contractors themselves should also have general liabilities insurance and builders risk insurance coverages to protect their business during renovations. You might consider asking to see their certificate of insurance. If they lack proper coverage, you may think about hiring someone else.

What if my renovation project was done without proper permits?

There could be severe consequences if you or your contractor failed to get proper permits for your renovation. An inspector could either shut down your renovation or, if you already completed the reno, the inspector could force you to tear it down and start from scratch.

This scenario could also affect your future homeowner insurance claims. You might not be able to get proper coverage if your home was built without permits.

Ready to renovate?

Get in touch with our Nelson Renovation Consultants to discuss your renovation as well as insurance options for your big project.