How home renovations affect your insurance

South Africans didn’t just spend their lockdown baking banana bread and making sourdough. They also took the opportunity to do renovations at their homes, with the hardware industry reporting an unexpected boom in home upgrades, repairs and extensions.

But if you’ve recently renovated your home, it’s critical that you revisit your insurance policies to make sure your buildings and home contents remain insured correctly, says Wynand van Vuuren, partner of client experience at King Price Insurance.

“Anything that affects the replacement cost of your home can also affect the value that you’re insured for, and the likelihood that your insurer will pay 100% of your claim,” says Van Vuuren. “If you’ve done a renovation, or added a pool or a granny flat, your property is suddenly worth a lot more, and your policy needs to reflect the new value. The biggest mistake you can make is to be under-insured: If you’re 50% under-insured, for example, your insurer will only pay out 50% of your claim in the event of any losses.”

If you’ve done some renovations or improvements, here’s what you should be doing.

Know the different types of insurance

To start with, it’s important that homeowners understand the two different types of home insurance:

  • Buildings insurance. As the name suggests, this covers the structure of your home and its outbuildings, and their permanent fittings, against fire, damage and theft. If you own a house, make 100% sure you have buildings insurance. Regardless of whether you have a bond or not.
  • Home contents insurance. This covers your stuff. If you could turn your house upside down and shake it, what falls out is home contents – clothes, furniture, TV, wine glasses, the lot. A lot of people don’t have home contents insurance. Bad move.

Do a post-reno buildings insurance review

If you’ve got a bond, it’s compulsory to have buildings insurance. This is usually taken care of by your bank, and the premium is ‘hidden’ in your monthly bond repayment. But you’re not obliged to accept your bank’s quote, and it’s possible you’ll get a cheaper premium from the insurer that covers the rest of your valuables. So do shop around!

 

Insure for replacement value, not market value

A building’s insured value isn’t its market value. Buildings insurance should cover what it would cost to rebuild your property from the foundations up, including your boundary walls, solar panels, swimming pool, taps and tiles. It should even include what you would need to pay in a worst case scenario, like demolition charges and waste removal, and the professional and municipal fees that are part of the building process.

Review your home contents coverage

If you’ve built onto your home, and filled the new extension with brand-new furniture and appliances, this is a great time to update your home contents insurance as well. As with buildings insurance, the key is to make sure you cover your home contents for their current replacement value – don’t guess. And remember, insurers can only protect what they know about. It helps to keep the original receipts for items like big screen TVs, so that you can prove their value if you need to claim. To help you assess your home contents correctly, here’s a handy home contents inventory.