29 July 2026 | See disclaimer
Renovations around the country have reached an all-time high. In 2025, about one in every three households across Australia took on a renovation, with average kitchen renovations costing over $27,000 and bathroom renovations costing $19,000. [1]
Building construction costs have risen 3.4 per cent over the past twelve months. [2] Coupled with the Housing Industry Association (HIA) Trades Availability Index recording -0.47 at the end of 2025, indicating a significant shortage of skilled tradespeople, [3] the cost of renovating is increasing.
Due to expensive materials and fewer trades, the need to make smart renovation planning is more important now than ever. Wanting to improve your home with renovations can be a great way to add value to your property; however, it can also be an overwhelming task to take on, especially with current costs.
With careful planning and a review of your insurance cover, you may be able to work towards staying within budget while also making sure your property is appropriately covered.
Plan Your Renovation
When it comes to renovating, it’s important that you don’t underestimate how much it will all cost. Carefully define the exact parameters of what you want to achieve, and then consider seeking several quotes from different tradespeople. It’s worth factoring in additional costs, including extra insurance, permits, inspection fees, levies or council application fees, and considering your particular objectives for the home renovation.
Careful planning and preparation are essential parts of any home renovation. It could be worth taking the time to understand your costs, gather quotes, consider timings and familiarise yourself with all necessary regulations. Before you start spending money on materials, supplies or labour, you may need to make sure you’re comfortable with the plans you have in place.
Setting a budget and working to keep within it is an important part of any renovation, though it’s equally worth being mindful of where costs are cut.
We all have different priorities when renovating our homes, and if you cut corners on labour or materials, it could mean additional maintenance and repair costs down the track.
This is especially true for DIY projects where professional guidance may have been beneficial. It could also be worth looking to engage any trades early, as the vacancy rate for technicians and trade workers was recently at 56.1 per cent at the end of 2025, meaning availability may be limited, and prices could be higher. [4]
Let Your Insurer Know
Before undertaking any home renovation work, always contact your home and contents insurance provider to let them know about the planned work before it begins. This is often an obligation to tell your insurer about any planned renovation or construction, as it may affect your cover. There is no ‘blanket policy’ with insurers in Australia regarding what they do or don’t cover during renovations, and each insurance company is different, so it’s your responsibility to inform them of your plans and seek advice on the questions you have.
Renovation cover depends on your individual insurer, your individual policy and the type and extent of building works being carried out as part of the renovation. You should confirm the full details with your insurer so there are no doubts in your mind about what you’re covered for during the renovations. For new policies or renewal policies starting, ensure all relevant renovation details are disclosed.
If you’re going to be away from your home for an extended period of time, this can also affect your insurance cover due to a long period of unoccupancy. Before any work commences, it could be worth checking with your insurer to understand whether you may have cover under legal liability while renovating.
Budgeting for Your Renovation
Between the Australian Bureau of Statistics reporting a surge of up to 50 per cent in material costs, and the HIA Trades Availability Index recording a low in trade employment, [5] it may be worth considering a contingency buffer to help manage unexpected costs during your renovation.
We suggest that while undertaking renovations in the current climate, budgeting for 5 to 10 per cent of your property’s current value can help ensure you can handle any emergencies or surprises that may happen. [6]
It’s best for home owners to keep in mind that a completed renovation is also likely to affect their home insurance. Because a recently renovated home may have a higher replacement cost, this could mean a higher sum insured is required (also known as the amount to rebuild your house from the ground up).
Forgetting or neglecting to accurately update this figure to match your current home can potentially lead to underinsurance. This means, although you may have home insurance, if your house is destroyed by an insured event and your sum insured is low, you’ll be out of pocket to pay the difference.
To help you decide what you think your home is worth, you can use the Home and Contents Replacement Cost Calculator.
Choosing and Managing Your Trades
If you hire builders to carry out renovation work, it’s worth taking the time to understand the full implications of the contract. Finding the right contractors can be a challenge to research, and it’s understandable to feel this way. Securing a fair price is just one consideration. It’s also worth finding tradespeople who are available to do the work you require and who conduct themselves with professionalism and care.
When hiring contractors, it could be helpful to gather multiple quotes to compare against your budget, request contracts in writing and verify your tradespeople by checking their licences before engaging them. Depending on the state you reside in, you can check their licence through the following verification resources:
Although you’re responsible for your own insurance cover and legal liability, typical insurance policies won’t cover damage or injury to anyone employed to work at your property. To ensure your contractors are also covered, you’ll need to confirm their public liability insurance or home builders’ insurance provided by their business before any work begins. [7] If a renovation is commenced by an unlicensed worker, you may be liable to cover a worker’s injuries if they unfortunately injure themselves while working on your property. This is why it’s in your best interest to make sure they have the right insurance cover to protect yourself from possible and unforeseen financial risks.
Keeping Your Home Safe and Insured During the Renovation
To protect your home during your renovations, take these few steps to ensure your asset is properly insured.
- Notify your insurer
- Check your policy for cover
- Confirm your builder’s licence and insurance
- Review your sum insured
Let your insurer know before any renovations from qualified tradespeople begin. You’ll need to let your insurer know about the types of building work you’re looking to complete and if the home will be unoccupied during any period of the renovations.
If you’re leaving your home unoccupied during some of the renovations, this may not be covered, which is why it’s important to let your insurer know. To make sure you’re covered, it’s worth speaking to your home insurance provider and checking the Product Disclosure Statement (PDS) carefully to understand your policy for any additional excesses or conditions.
Verify the licence from your builder and their building and liability insurance. As some insurers don’t cover your legal liability for buildings under construction, verifying your builder’s insurance can help protect yourself from risk.
Once some renovations are completed, it could be worth reviewing your home’s sum insured amount, as further rebuild costs may have been added to your property.
It may be best to consider increasing your sum insured to avoid any potential for underinsurance. As Master Builders Queensland reports, the cost to build a new home has risen by $10,000 to $15,000, [5] and an outdated sum insured could leave you severely out of pocket, which would not just be devastating but may impact your financial wellbeing.
Are you renovating? Make sure your home insurance protects you. Get a Home and Contents Insurance Quote online and save 30%^ on your first year’s premium.
Protect What You’ve Built Post-Renovation
Renovating your home is a significant milestone, and taking a few steps along the way may help ensure your property remains appropriately covered throughout the process.
This could include reviewing your sum insured to reflect any changes in your home’s rebuild cost, letting your insurer know about any new additions, such as an extension, solar panels, or a deck, and keeping all compliance certificates and warranties stored safely for future reference.
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