Renovation boom could leave homeowners underinsured – AMI

Renovation boom could leave homeowners underinsured – AMI | Insurance Business New Zealand

Renovation boom could leave homeowners underinsured – AMI

New Zealand’s COVID-19-era home renovation boom could leave Kiwis underinsured, a nationwide survey by AMI and Ipsos found.

The survey found that one in three homeowners have made major or structural renovations to their home in the past 18 months. However, 54% of that group did not update their home insurance policy following the completion of renovation work.

According to AMI, homeowners conducting home renovations should think carefully about how their renovations will change their home and contents insurance needs. This includes checking whether the right cover is in place to protect the extra value added to the home in case disaster strikes and they need to rebuild and refurnish from scratch.

“Lockdowns and international travel restrictions have given more Kiwis the time and budget to spruce up their homes – often making them bigger, more comfortable and more functional for day-to-day living,” said Wayne Tippet, AMI executive general manager, claims. “If you’re extending your home, rebuilding your kitchen, or adding an outdoor feature like a deck or swimming pool, it’s important to contact your insurer to check you have adequate cover for the investments you’re making.”

Agents and brokers should regularly remind their clients about updating their home cover, especially if they learn that a client is having work done on their house.

The survey found that almost 23% of home renovations cost more than $51,000, while 15% cost between $31,000 and $50,000, 31% cost between $11,000 and $30,000, and 31% cost less than $10,000.

Bathrooms and kitchens (45% each) were the most popular rooms to renovate, followed by outdoor areas (40%), bedrooms (26%) and lounge rooms (22%).

Another major source of risk is lack of cover during the renovation process.

Fifty-four per cent of home renovators did not consider taking out contract works insurance (CWI) for the home improvement project, while 14% said they were not aware of CWI, the survey found.

“Homes undergoing major renovations enter a phase of being less structurally sound, which is why most home insurance policies have exclusions in place when homes are being worked on,” Tippet said. “Contract works insurance is there to cover damage caused while your home is structurally more exposed to risks.”