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You insure your car, your health and even the family pet. So it makes sense to insure your home – even if it doesn’t exist yet.
What does building insurance cover?
According to one of Australia’s biggest insurers, NRMA, Australians building a new home should protect it while it’s being built.
General Manager of Customer Experience and Marketing for NRMA Insurance Jane Merrick says insurance exists to “help people get back to the position they were in before they suffered a loss”.
“That’s why it’s important to ensure you are covered from unexpected events like storms, fires and malicious damage when building a new home,” Merrick says.
You will need insurance to cover the build. Picture: Getty
How do owners insure a property under construction?
First, Merrick says, ensure the builder has a valid insurance certificate.
“For example, builders in New South Wales need to have insurance under the Home Building Compensation Fund to ensure consumers are protected against defective or incomplete building work,” she says.
Other states have similar schemes.
Check out the NSW Fair Trading website for more information about the Home Building Compensation Fund.
“For additional protection, we encourage people to get ‘contractors all risk’ cover, which provides protection for common risks like storms and fires or malicious damage,” Merrick says.
‘Contractors all risk’ cover provides cover for the whole construction period and includes protection for building materials, any building work that has been completed and liability at the property.
Should owners change insurance type at any stage during the building process?
“If you have a ‘contractors all risk’ policy, this covers you for the whole construction period and doesn’t need to be updated for the different building stages,” Merrick says.
When should owners switch to a home and contents insurance policy?
When the new house reaches the “lock-up” stage, home owners should organise home building and contents insurance.
“If you know the date the construction will be completed, you can call your insurer in advance to select the date your home building and contents insurance will be effective from,” Merrick says.
NRMA Insurance has an online tool which can help home owners identify the risks facing their suburb and work out the right amount of insurance cover.
What about renovations?
“If you are undertaking renovations on your home, it’s important to talk to your insurer and check if you are covered under your home building and contents insurance policy. Cover will depend on the scale and scope of the renovations,” Merrick says.
If using a builder, check they have a valid insurance certificate before any work starts.
“Once the renovations are completed, take the time to update your policy so it includes the changes made to your home.”
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Realestate.com.au
