Uncomfortable truth – Until an emergency happens – Bushfire – Owner Builders either underinsure or take the risk and NOT insure.
It has been ‘scary’, not only the Bushfires but the number of Owner Builders who have rung, begging for cover for their home that is being built or renovated, in the fire zones of NSW and QLD.
They had NOT taken out the Construction and Public Liability Insurance at all or have woefully under insured the project.
And we CANNOT help them!
They stand to lose millions of dollars because they wanted to save a few dollars by NOT taking out a policy before starting.
Most renovations are excluded by Home and Contents Insurers because the home has become a building site and therefore the existing home, renovation and contents are no longer insured during the project build.
Under insurance, is a big problem in the insurance industry but in the words of Carmen Fouracre, Manager of Buildsafe Insurance Brokers. “it is unbelievable that Owner Builders would not Insure the biggest investment in most people lives to save a couple of bucks…Incredible”
How under insurance works:
For Example, if your sum insured is only 50% of the value of the property required to be insured at the time that the Insured Damage occurs, the Insurer will only cover a proportional amount of your loss, as set out below:
Full insurable value $100,000 Sum insured $50,000 (i.e. 50% of the full insurable value)
Amount of your loss $75,000 Amount the insurer will pay $37,500 (i.e. 50% of the loss less any excess
This means you will be responsible for 50% of the loss you suffer (as well as any applicable excess) because your sum insured was only 50% of the value of your property required to be insured.
And to make it even worse, as Emily Brooks from AOBIS, a specialist Owner Builder Underwriting agency explained “ I had an Owner Builder who was half way through a $1.5 million new home project and had no insurance”
Rule 1 if renovating – Check with your Home and Contents Insurer whether they will continue to Insure your home, renovation and contents while building.
Rule 1. If Building a new home – Buy the best cover Owner Builder Construction and Public Liability Insurance before you start!
Today it is Bushfires but tomorrow it may be Floods.
Protect your home, your family’s investment.
And take out Owner Builder Construction and Public Liability Insurance, please.
P.S Homeowners, if you are using a Registered Builder to renovate your home check that he has insured you existing home and contents.
Check.