What Renovation Insurance Does for You – And Is It Needed?

Here’s a simple guide, plus a breakdown of coverage and premiums!

You’ve probably heard about insurance policies that cover your health, home, and belongings, but renovation insurance? That’s something which is rarely heard about, however, if you’re a homeowner who is about to embark on a renovation, you’ll surely want to take note of it.

Apart from covering material damage, renovation insurance also applies to accidents caused to your neighbour’s homes. So, should you budget for it? Well, that’s for you to decide after reading up on these facts about renovation insurance:

What’s the purpose of renovation insurance and what does it cover?

The purpose of renovation insurance is as straightforward as it gets – it’s all about protecting your home makeover so it can go on even after unforeseen circumstances. However, one key thing to note is that the coverage for renovation insurance policies doesn’t extend to personal belongings. (For that, you’ll need home contents insurance.)

Instead, renovation insurance generally covers the following*:

• Physical damage to your property or renovation materials

In the event that the structures in your home OR construction materials (e.g. new tiles, pipes, or wires) are damaged it’s possible to a file a claim to recover the value of what has been lost. Essentially, this allows a renovation to be completed, even in the face of additional costs incurred by repairs or replacements.

• Losses incurred by a third party

Because of the labour-intensive nature of renovation works, it’s entirely possible for a third party (say a neighbour) to end up in a situation where they get injured and/or cause damage to the third party’s house/property from an accident occurring at the worksite. Third party liability coverage guards against such scenarios.

Who is renovation insurance for?

In Singapore, renovation insurance policies are usually only taken out by interior designers or contractors to protect their businesses against unforeseen circumstances that result in physical and/or monetary loss – but that isn’t to say that homeowners won’t benefit from these policies as well.

Although they don’t happen frequently (thankfully), there are past cases documented in local news where freak weather events, onsite accidents, and even theft, have put the brakes on an ongoing renovation project or resulted in third-party losses.

Take for instance, this incident in 2016 where debris from demolition works hit a neighbour’s house, resulting in broken window panes, four damaged air-con condenser units and a cracked backyard. Or this spate of theft cases where renovation tools “including hand drills, electric cutters, battery sets and handsaws” were stolen from HDB flats under construction in 2017.

With a suitable renovation insurance policy*, an interior designer/contractor could be able to safely cover any financial or legal costs from similar events – sans the risk of going into bankruptcy – and that in turn, increases the likelihood that their clients (i.e. you) will be able to receive the keys to a completed home.

How much are renovation insurance premiums?

The cost of premiums for a renovation insurance policy largely depends on two factors: 1) the Third Party Limit, which is the maximum possible dollar amount that an insurance company will pay out in the event of a valid claim, and 2) the total estimated cost of your renovation.

For renovation insurance, Third Party Limits can be as high as $5,000,000 for a (very major) renovation that costs $1,000,000, and for that you’d be looking at a minimum premium of approximately $850.

That said, given that the cost of an HDB flat renovation in Singapore generally falls within the ballpark range of $38,850 to $79,000, it’s likely that the sum your designer/contractor (or you) has to fork out will fall on the lower end of the scale – which is to say, the premium for a renovation insurance policy could cost only around $250.

It’s also worth noting that you’ll have to fork out this amount just once as premiums for renovation insurance are charged on a per-project basis.

Here’s where can you get renovation insurance in Singapore

A protected renovation is one that gets completed – and one way to ensure that would be to get a renovation insurance policy like Allied World Insurance’s Renovation 360 plan.

To get a quote, simply visit the Renovation 360 information page. Alternatively, you can reach out to sg.customerservice@awac.com for more details. Plus, get a 20% discount off when you sign up for Renovation 360 from now till 8 October 2021!

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