Blog Question: Requirement to advise insurer when major home renovations are undertaken

Home ImprovementHi Allan,

I was in discussion with an insurance underwriter who was dismissive of me when I suggested that one of our staff needed to advise his company when a major renovation was being undertaken to one of our client’s home.

Could you please advise if the requirement to advise the insurer is still market practice.

Thanks and regards

John [surname and email provided]

Hi John,

I would confirm that the long standing common law requirement to advise an underwriter if the risk exposure increases still stands and of course this includes major alterations to the building. This is the case for domestic as well as commercial buildings.

This common law position is reinforced in the insurance contracts with insurers stipulating at what monetary level they want to be advised.

I ran a quick comparison using LMI and found that like most things there is no industry standard among Australian home policies.

It does vary in the market with one being as low as $2,000, yes only $2,000! Others were $20,000, $25,000, $30,000, $75,000, $100,000, $150,000 and $200,000. In other words it is all over the shop. As always it is important to read the individual insurance contract concerned to ensure at what level an individual client needs to advise the underwriter.
It may be that depending on the size and complexity of the renovation that the insurer will not accept the risk and it may be necessary to purchase contract risks insurance on the existing structure(s).

I hope this is of benefit to you, your client and your team.




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