Every home owner should ensure they have adequate insurance on their home before they start down the road of getting an extension.
Clients must have House and Contents Insurance up to date before commencing an extension to their home. Talk to your insurance company and get clarification of what they will and won’t cover. At Duncan Thompson we may be able to assist you if you have concerns about your level of cover.
Types of insurance that need to be considered before extending are:
- Home Owner’s Warranty Insurance — 7 years after completion.
- Construction Insurance
- Existing Property Insurance
Some insurance companies will not cover for building insurance while the extension is being built.
Home Owner’s Warranty Insurance
Home Owner’s Warranty Insurance insures the owner (or subsequent owners) against non-completion of the building contract due to death, disappearance or insolvency of the builder, and failure of the builder to correct faults, which are deemed by law to be the builder’s responsibility, for a nominated warranty period. These contingencies are poor workmanship, structural faults, and inadequate or unsuitable materials and is only triggered by the death, disappearance or insolvency of the builder.
Construction Insurance will protect the home owner during the building process, including any malicious damage and vandalism, theft, fire damage, storm, wind and water damage that may occur. If finance is being obtained for the extension from a lending institution, they may require evidence of a Construction Insurance policy prior to releasing any funds.
Statutory warranties require the builder to do the work:
- In accordance with the plans and specifications in the contract
- In a proper manner
- Using good and suitable materials
- Using new materials unless otherwise stated
- In accordance with laws
- Within the time specified in the contract
- So as to be fit to be occupied when completed; and
- So as to live up to any result agreed it must achieve