Tell your insurer before you do this at home

A quick bit of DIY is in Kiwis’ DNA. And we’re forever employing builders and other tradespeople to add on a deck, move a wall, install a bathroom and so on. But did you know your insurance may not cover this work?

DIY can result in disasters. Tradespeople sometimes cause accidental damage. Tarpaulins covering the roof or other building work blow off during a cyclone and the interior is subjected to heavy rains.

In these scenarios the damage would be excluded under most home insurance policies because “contract works” aren’t covered because they’re an added risk you haven’t paid for with a standard home insurance policy. There will be for “structural additions or alterations” or similar wording.

What that means is that home owners who are doing DIY alterations or employing contractors need to take out an additional policy for the “contract works”. Some of the issues to consider include:

Stacking the cards against the insurer: home owners often don’t understand why their building works aren’t covered by their house insurance. The reason is that the risk of damage is increased and therefore the premium you have paid doesn’t reflect the risk.

• It’s only a small job: Big or small you still need cover. No matter how small the job, if you’re having works done you do need to let your insurer know and pay the extra premium if required.

• Public liability insurance: Providing the tradesperson has taken out public liability insurance they should pay out if they cause damage to third party property caused by “negligence”. But this doesn’t cover all eventualities.

• Faulty work: Contract works insurance doesn’t cover home owners for faulty workmanship. In one case heard by the Insurance & Financial Services Ombudsman, an entire block wall was not covered because the problems were a design issue.

Fortunately most good tradespeople know that you need to take out this cover for both the building work and any damage to the rest of the home caused by the works. Sometimes they will arrange the cover as part of the overall project cost. If not you need to do this yourself and your home insurer will have a policy to sell, such as State Insurance’s Contract Works Single Project Policy.

Vero’s Site Cover policy insures homeowners if the house is damaged by insured events such as fire, flood or cyclone. The insurer will pay to repair or redo the work.

The amount covered is usually is the replacement value of the materials and works. Many policies such as Vero’s will also cover additional costs incurred following a loss such as clean-up, debris removal and additional professional costs.

Even contract works claims can, and do, get declined. Common exclusions include landslip. One case heard by Insurance & Savings Ombudsman Karen Stevens involved a loss following a landslip caused by heavy rain. Because the landslip wasn’t caused directly by the contract works the claim was declined.

As well as getting contract works insurance, home owners also need council consent for these works to ensure the insurance pays in a worst case scenario such as a fire starting in an unconsented garage that moves to the rest of the house.

Around 15 per cent of major fire claims start in garages. And if the fire is proven to be caused by electrical overloading, for example, thanks to the illegal works, the homeowner could well face a battle to have the claim paid.

It’s also essential to ensure your home is covered for the value of the renovations once they’ve finished. A common mistake is that homeowners don’t get a new valuation for insurance and do not realise that the home is under insured.