Risks that can cost you your home!
A little while back I published a post titled ‘Beware harsh exclusions that turn the policy into junk insurance‘ that has proved very popular.
There is another area that worries me, particularly for home owners, and that is around the “do it yourself’ers” who seem to be on the increase based on any trip to Bunnings on the weekend.
It is not surprising for a couple of reasons. First is the cost of getting a trades person, if you can actually get one to turn up.
Secondly, the number of shonky tradies out there who leave customers with a rubbish job and/or run off with the cash is on the increase. The number that borrow and/or steal tools and over charge is also of concern. In other words, the trust in the construction industry is very low.
Having said this, if you have a good trades person, look after them, do not try and screw the price down so that it is uneconomical for them to do the job, pay them quickly and do not mess them around.
Another reason is the number of do it yourself building and renovation shows on television. It has been made to look so easy to do a quick and cheap renovation and many inexperienced people are getting involved.
Home automation is also on the rise and many trades are not keeping up with this. I have spoken to a large number of electricians for example, most of whom know nothing about the subject. Others of course, are right on top of it and again if this is what you are after they are worth their weight in gold.
I am personally into home automation with the aim of reducing risk and the last thing I want to do is inadvertently increase the risk of damage or injury through my efforts.
I am very conscious that there are serious risks when you take on home renovations yourself. One is that if you do not know exactly what you are doing, you can cause damage to your home which for many people is the largest and most important asset.
Examples here are incorrect wiring which can lead to electrocution or starting a fire. Plumbing and or tiling works can lead to water leaks from pipes, shower recesses, and the like. Some damage may not manifest itself for years to come.
Every year we see losses arise from something as simple as incorrectly installing or using faulty Christmas lights.
Damage to your home is bad enough but what if your insurance does not cover that damage and you are hit with a double whammy? Could you imagine when some electrical work that you have done causes a fire and destroys your entire home and contents? And then you find that your insurance policy has an exclusion or two that means you have no insurance protection at all.
In some cases, you may find that you are also up for a fine for breaching state or federal regulations. There are quite serious penalties. For example, doing your electrical work. In Queensland I believe it is up to $40,000 but much higher including the possibility of jail if there is serious injury or damage.
I stress that this is not major electrical works. It is for even the most basic thing like changing a plug on the end of an extension lead or cutting one to install say a “smart” switch.
As readers of my blog would know as I say it so often, the coverage afforded by insurance policies vary greatly. What can be an exclusion in one policy can be a condition or warranty in another. It may be a peril exclusion, a section exclusion or a general exclusion. Exclusions that mean the same thing can be written in so many ways using different terms and language.
If you are not sure please speak with your insurance broker who are experts in their field and who have access to LMI PolicyComparison.com.
With this warning about so many differences I have chosen one policy to point out the types of exclusions I want to warn the public about. I chose the insurer from the last advertisement that I saw on television. This was Youi and I have chosen their Defined Events Home and Policy released in April 2019.
The exclusions which could apply from property damage or personal injury following do it yourself home renovations include, starting with relevant perils exclusions:
8. Escaping Water
What is not covered?
Loss, damage or legal liability which was:
• caused by water escaping:
– slowly over a period of time and you could reasonably
– have been aware of it;
– from a leak in a shower base, recess or cubicle;
– from a bath, shower or basin as a result of splashing while in use;
– from a pipe that is designed to leak (such as an agricultural pipe); or
•• sustained by the item (such as a shower base, pipes, cisterns) from
which the water escaped, whether or not we accept a claim for loss
or damage caused by the escaping water;
•• caused by rain water;
•• caused because the insured property is not in good condition; or
•• caused by rising damp or seepage of water from the ground.
What is not covered?
Any claim for legal liability for death or bodily injury to:
•• a household member,
•• any employees working for you or for a household member
unless the person is a permanent boarder, your tenant, or any other
person who resides at the insured premises who is not your family.
Any claim for legal liability for loss of or damage to property that belongs to:
•• you or is under your legal control;
•• a household member; or
•• any employees working for you or for a household member.
- civil or criminal penalties, fines or awards of aggravated, exemplary,
punitive or multiple damages against you, however described;
- your buildings undergoing repairs or renovations of a value more
- than $50,000;
Note I have seen similar exclusions around the value of renovations being a general exclusion which means that damage to the home is also excluded during periods of renovation above a certain amount.
General exclusions apply to all sections of your policy and describe
circumstances where your policy will not provide cover for any loss, damage or liability arising directly or indirectly from any cause noted below.
We will not pay for death or bodily injury to any person, or loss or damage to property caused directly or indirectly by:
5. any event that occurred before your cover started with us or after it ended;
7. the intentional or deliberate acts or omissions of you or any person covered under your policy, or by any person acting for you or acting for any person covered under your policy;
8. any illegal activity, by you or any person acting on your behalf;
[Note if it is illegal in your state or territory for you to do your own electrical, or plumbing works or for you to do any building works without the correct planning and or building permits it may well be deemed to be illegal.
9. fines, penalties or aggravated or exemplary damages;
10. legal repossession or confiscation or lawful destruction of any insured item or property;
13. wear and tear, rust, corrosion or deterioration;
14. rising damp or seepage of water from the ground;
15. mould, rot, damp or the effects of the climate or weather;
16. a process or system of cleaning, restoring, modifying or repairing any insured property;
20. the presence or possible presence of chemical or biological pollutants or materials;
I hope this post has got you thinking about the risk associated with home renovations.