Insurer can freeze liability on household insurance during renovations

Insurer can freeze liability on household insurance during renovations

Taking a contractor's liability and building insurance while renovating a house is often the best way to stay fully insured. Because of the high risk involved during renovations insurers are likely to freeze certain parts of their normal cover.

South Africa's property market has remained consistently buoyant over the last five years, and home owners wanting to cash in on this phenomenon are giving their houses a face-lift as a way of increasing value.

Craig Deats, National Insurance Manager at Mortgage SA, says "Home owners should protect their assets during renovations by having a contractor's liability agreement run concurrently with a building insurance policy"

Deats cautions home owners to be 'mindful' that insurers freeze liability on certain parts of household insurance because they maintain that any damage resulting from the renovations should be the sole responsibility of the contractor. The cost of repairing damages resulting from renovations can run into thousands of Rands, it is important for the homeowner to investigate the terms of the insurer's contract and to ascertain whether or not the liability stays active during renovations.

A renovation, in insurance terms, is any alteration to the current structure of the house which requires the expertise of legitimate contractors. For example building a new room, building a new kitchen, installing a swimming pool or an extension to an existing part of the house.

By placing both the contractor's all risk and building insurance in motion while renovations are taking place, the homeowner can rest assured in case an unexpected calamity occurs, that the claims are not rejected.

"The home owner will be provided with recourse where third party liability is concerned, for instance, if a builder trips over electrical cables, dislocating the electrical network system, the client will be fully covered and is protected against any claims that may be declined by the contractor" says Deats.

The Building insurance policy stays inactive until renovations have been completed. However, it's important for the owner to clearly indicate to the insurer that work has been completed and to specify the volume of such work to ensure that the insured sum insured is readjusted to the correct new value.

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