Windfalls and insurance

By: Bertus Visser, Chief Executive of Distribution at PSG Insure

That end of year bonus, tax refund or loyalty points pay out, has so much promise. For some, this year might look a little different, but for those who are fortunate enough to receive some extra money, it may go into debt repayment or to boost savings. Others may be considering directing a financial windfall (even a small one) into some property maintenance or upgrades. Before you spend it, or if you’ve just begun, consider these key reminders to help keep your plans on track.

A new look

Maintenance not only improves the appearance of your home (or even office space) but is often a must for short-term insurance too. If you’ve let some tasks slide like trimming trees or clearing gutters, you need to put time aside to get these done (or employ someone to do it for you), as any insurance issues will include wear and tear as part of the claim consideration, and you can lose out on getting a pay-out if you let maintenance fall behind, or if poor maintenance is the cause of damage to the structure.

Lock up and glow

A shiny new security gate with automatic features is wonderful to have, but if you’re installing it in the hopes of reducing your insurance premium, take one step back first. Checking in with your insurer to see if any security upgrades would have an impact (or are recommended) in the area you live or work in, is a great first move.

Security upgrades can certainly enhance safety, which is always a good thing, but some features may not be worth the cost, compared to others. Spending money sensibly to get the best security for your needs is the safest move.  

Renovations need policy renovation too

Perhaps your changes aren’t security-focused, but are instead space-enhancing, to allow your family to grow, or for AirBnb to boost your income. Any renovations need to be noted in your insurance policy too, as they increase the value of your property. If a home business, such as AirBnB is in place, your insurer needs to be notified too, and your cover may need to be adjusted. If a new business venture is planned in the extended space or new tenants, check in as well to ensure proper cover.

It is actually the smartest move to notify your insurer before you start renovating as special conditions may apply, such as a higher excess or exclusion on certain perils while building operations are in progress.

Avoid awful outcomes

Enlist the services of trusted tradesmen in the process of renovating. If you fancy yourself a bit of a handyman (or woman), be sure that none of the upgrades you are planning require compliance certificates or qualified installation. It’s often better to seek professional help to be sure, and many plans require approval from council anyway.

Poor workmanship can be an issue when it comes to insurance. An example includes a claim repudiated on a perils-based policy as the engineer’s report, issued by the insurer, confirmed the tiles that had cracked (and were being claimed for) had badly compacted soil below them, which caused the tiles to move over time. Subsidence may well have occurred and would be covered in the policy, but the engineering report proved that no insured event caused the damage. It turns out the insured should have used better workman initially, and disclosed the situation and any damage earlier, in order to rectify the policy. Policies are normally endorsed to exclude damage to the affected areas until proof or rectification can be provided by the insured. In this instance, you could try to claim from the questionable contractor, but it’s much better to just work with a professional from the start.

Loyalty needs follow through

Whether your property improvements are paid from loyalty points or a cash bonus (hopefully not on credit, unless you’ve properly planned for it), you need to include them in your insurance cover.  Your property, even without renovations, is likely to go up in value as time goes by, and if you’re not paying off a  bond as part of it, you can forget to keep your building sum insured on track. Therefore, you need to include a check-up on your insured property value at least annually.

Since an influx of cash could also mean settling your bond once and for all, a top tip is to ensure insurance cover remains in place. You may have finished paying the bond, but the building is still at risk of fire, for example.

Every penny is precious in these unpredictable times. Chat to your adviser to spend your windfall wisely (or before you make any elaborate upgrades). Your short-term insurance can be a deciding factor and should be a firm part of any plan.

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