Home Renovation Insurance Guide for South Africans

By Tokkie Ferreira       Last updated May. 25, 2018

Renovating your house can be very advantageous. Besides adding an aesthetic appeal, remodelling can increase the value of a home, make it more comfortable, as well as reduce energy and associated costs.

Some homeowners make the common mistake when remodelling, by not considering the implications of the remodelling project on their home insurance policy.

Any project that increases the value of your home is supposed to make a difference in your insurance policy. It is necessary to consider home insurance when you are thinking of embarking on any remodelling project.

For most homeowners, the kitchen and the bathrooms are the major areas to remodel.

Whenever you embark on any home improvement project, it is advisable to follow it up with an update on your insurance policy so as to obtain adequate coverage for the improvements made.

Generally, the cost of making the improvements will be considered and it will reflect in your policy as an increase in your premium, but this will ensure that you have a comprehensive policy that offers full coverage.


The Factors that Influence Insurance the Most

Understanding the factors that affect insurance the most will help you make the right decision while planning for your renovation project.

The insurance company normally considers factors such as the age of your roof, the area you live in, and the level of your security system in offering you a home insurance policy.

Should you opt for adding fixtures made of wood and thatch, please make sure to disclose this to your insurer as this will increase the fire hazard at your home, which could also lead to an increase in premium.

Since most remodelling projects that add real value to homes normally happen in kitchens and bathrooms, insurance companies also consider the nature of these areas and any project involving them.


Getting Started

At the initial stage of your remodelling plan, it is advisable to hire a licensed home inspector who will provide a professional evaluation before you proceed with the process. Follow the recommendations of an expert in order to get an estimated value for your planned remodelling.

When you are sure of what you really want with the remodelling project, the next step will be to contact your insurance broker if you have any.

The broker will advise you on how the renovation will affect your already existing home insurance policy and will guide you on how much extra coverage you will require.

If you do not work with an insurance agent or broker, you will need to talk to your insurance company directly about your remodelling project and the cost implications.

The insurance company will make their own estimations and present you with the changes that will have to be made on your policy and how it will affect your premium.

Your Insurer will take into account the costs for the material, labour and also wreckage removal. Your home therefore might be insured for more than what its market value will be.


How the Remodelling will Affect Your Insurance Coverage

When you embark on a remodelling project, your major concern may be to improve comfort and increase the value of your home.

For the insurance provider, what has happened can be interpreted in a number of ways. Firstly, the replacement value of a home will definitely change after a remodelling or renovation effort.

Some projects will significantly increase the value of your home so that your homeowner’s policy limits will not be enough to cover the house in the event of a serious loss.

If you have the highly important extended replacement coverage endorsement in your policy, there are even more reasons to keep your insurance company informed about the remodelling ahead of time.

Your personal property limits will also change if you added some new furniture or electronics in the remodelling effort. This also has to be accounted for in your insurance policy.

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Projects that improve the value of your home will generally increase your premium as the cost of replacing the house and the household contents has increased. This will mean a new premium, new excess, and several other important changes to the policy.

Potential Discount on the Policy

There is another way some remodelling projects can affect your insurance. When you update the major systems in your home like the plumbing, electrical, heating, cooling and security systems, it means that the value added to your home also includes improved security and general safety.

There is a possibility that these projects will attract some discounts that will reduce the total amount you spend on insurance. This is a win-win situation for you and your insurance company.

The New Policy Provisions

It is important that you have a clear understanding of the changes that have been made to your policy. It is always better if you work with a reliable insurance broker who will protect your interests in the process and make sure that the changes offer more insurance value to you at the best possible cost.

Get in touch with a reputable insurance broker in South Africa if you are considering renovating your home and need insurance-related advice during the process.

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