The informal nature of many building contracts also means that the builder could be without insurance themselves, and any attempt to sue would not lead to an adequate recovery of damages.
Angela Hughes, Commercial Underwriting Manager at Standard Insurance Limited, says homeowners doing even simple additions generally only have a standard homeowner’s insurance policy in place, which excludes building or construction work.
“This means that in the event of a serious claim arising from the construction work or alterations, ordinary South Africans could lose their homes as they would not have adequate insurance protection in place,” says Hughes.
“Homeowners can protect themselves against such risk in two ways. Firstly, ensure that the builder you have engaged has adequate cover in place before commencing work. This cover must include a contractors all risk policy to cover the work being done, as well as liability cover. Secondly, the homeowner themselves can buy a contractors all risks policy covering the construction or alterations taking place.”
It is important to take all the risks into account and not to just go for the lowest form of protection
A once-off contractors all risk policy and premium to cover the building work need not be cost prohibitive.
Hughes says these policies can be flexible, based on the project and premiums start as low as R1 500 per project, but it is important to take all the risks into account and not to just go for the lowest form of protection.
For example, the policy should in most cases include a neighbour’s property in case of fire - just imagine the scenario of your neighbour knocking on your door after a fire and claiming damages for his or her house, as well as yours.
Speak to your insurer who can advise you and ensure that the appropriate cover is taken out, says Hughes.
Your property insurance policy should be updated once building is complete to avoid the average applying in the event of a loss. Many only consider doing this at the annual renewal stage, which could be too late.
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