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, pick up the phone and call your insurer.
Bond origination firm ooba warns that failing to keep your insurer in the loop can leave your property under-insured.
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 taken into consideration.
“As a result, many people choose to renovate their existing property, but few people realise the importance of telling their insurer of the work being done,” he says.
“The greater the degree of work being carried out to a property, the greater the risk of possible under-insurance.”
If you buy a home for R1 million and you have extensive renovation work carried out, the property may be worth R2m. However, if you do not update your policy, then the property could be under-insured by 50 percent. As a result, the insurer will only pay out on half of any claim.”
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 check. 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.
* “Get your property formally evaluated every couple of years,” advises Young. - The Star