Can Insurance Help Calculate Home Renovation Costs?

The home you live in will be the place where all family members return. As the safest place, it should provide the necessary comfort and protection. Therefore, it's no surprise that you should plan and consider the cost of home renovations to maintain its function and value, ensuring it meets your and your family's needs.

Home or residence maintenance is essential. In addition to ongoing maintenance on various aspects of the home, renovations are also crucial for maintaining the home's value and optimal function while you live in it.

This isn't just about the home's value, which typically decreases over time due to damage, but also about the security and comfort you and your family will enjoy.

The calculation of home renovation costs will also be related to PT AXA Insurance Indonesia's Home Insurance, which will be discussed in more detail below.

Also read: Mortgage Takeover: An Attractive Alternative for Continuing Home Installments

Looking at the Reasons Why You Need to Do and Calculate the Cost of Home Renovation

There are many reasons why you might decide to renovate your home and consider the costs. From a construction perspective, here are some reasons to consider.

1. Wear and tear on parts of the house

Naturally, parts of a house will experience wear and tear over time. Daily use causes some parts to deteriorate, requiring renovations to maintain their function and value.

Some areas prone to wear and tear include the ceiling, the paintwork due to damp walls, leaking plumbing, broken roof tiles, eroding kitchen cabinets, the building's frame, and so on.

2. Reasons for Space Needs

One common reason for renovations is when space needs become unmanageable. This can be caused by the addition of belongings, necessities, or family members, necessitating additional space to maintain comfort and function.

3. New and Refreshed Look

Renovations are also usually undertaken when someone becomes bored with the appearance and shape of their current home. Renovations can create a fresh new look and concept, bringing positive energy to everyone living there.

4. Improve Home Security

This could be related to the first reason, which is due to worn-out parts of the house. However, on the other hand, renovations to improve home security are also carried out to strengthen the building structure due to major changes, or to make the home safer from various hazards and risks that threaten safety.

5. Energy Efficiency

While this may not be widely practiced, awareness of energy efficiency is a good reason for home renovations. Changing the shape and structure of your home to better accommodate natural light and air circulation will help you save money in the long run while you live there.

6. Increase Home Value

Home renovations will also help increase the overall value of the home. A home with a more modern design, enhanced functionality, and sturdy materials and structure will command greater market value, potentially generating profits in the future.

Also read: Interested in Subsidized Housing? Understand the Concept and Rules First!

General Home Renovation Cost Estimates

Now that we've learned about some of the common reasons for renovating a home, it's time to look at the general cost estimates for home renovations in Indonesia. There are at least five factors that can influence the estimated cost of a home renovation. These include:

The payment system used, whether contract or daily.
The scale of the renovation being undertaken.
The materials used in the renovation process.
The location of the home renovation and the average labor wage.
The design and existing structure of the building to be renovated.

Considering these five factors, the resulting home renovation costs will vary considerably. After considering all of the above variables, a useful estimate is as follows.

Home Renovation Cost Overview and Estimate

First, determine the area to be renovated. This area can be calculated based on the room size. For example, if you want to renovate 100 square meters of a house out of a total building area of 200 square meters, the estimate will be calculated based on 100 square meters only.
Second, determine the type of renovation you will undertake. Will it be a light renovation involving just painting, ceilings, and floors, estimated at Rp 500,000-Rp 800,000 per square meter? A medium renovation involving the kitchen or bathroom, partitions, and new tile installation, estimated at Rp 900,000-Rp 1,500,000 per square meter? Or a major renovation involving demolition and structural replacement, estimated at Rp 1,500,000-Rp 2,000,000 per square meter.
Third, once you know the details, proceed to calculate the estimated renovation costs. For example, if the renovation is moderate, costing between Rp900,000 and Rp1,500,000 per square meter, the calculation should be:

= Rp1,500,000 x 100

= Rp150,000,000 for a total of 100 square meters of renovated area.

Of course, this renovation cost estimate isn't necessarily calculated like this, as it takes into account the costs mentioned in the second section. However, a simple formula can be used to understand the general idea.

Fourth, add a contingency fund of 10% to 15%. To this total estimate, set aside an additional 10% to 15% to anticipate changes or unexpected events.

A Reliable Comparison of Home Renovation Costs and Home Insurance Premiums

In general, home renovation costs are never small. The estimate above can give you an idea of how significant the expenses can be when renovating crucial parts of your home.

Especially if the renovation is due to unforeseen events such as fire, lightning, landslides, building accidents, and similar incidents that cause damage to parts or the entire house. Clearly, the costs required will be much higher than those for minor wear-and-tear repairs.

However, these costs can actually be reduced to a much more reasonable amount if you have a reliable home insurance product from PT AXA Insurance Indonesia. You only need to pay a regular premium to receive coverage sufficient to cover renovation costs caused by unexpected events, such as natural disasters or other causes beyond your control.

Of course, by meeting the applicable terms and conditions—which can be read directly in the General RIPLAY of SmartHome Insurance, you can find out the detailed costs required to obtain these benefits, along with all the provisions.

Home Renovation and Home Insurance

In practice, the calculation of home renovation costs and the home insurance we just discussed are closely related.

When you renovate your home, you can receive a number of benefits from submitted claims as long as you meet the agreed terms and conditions, significantly reducing the cost of home renovations out of your own pocket.

On the other hand, a renovated home with a solid structure will have more affordable home insurance premiums. This is based on the calculated risk of minimal damage to the home after the strengthening and renovation process.

Also read: Tips for Creating an Ideal Building Structure that is Safe from Earthquakes

Understanding and calculating home renovation costs in detail is key to avoiding cost overruns during the process. With PT AXA Insurance Indonesia's Home Insurance, you can enjoy several benefits during this process.

Calculating home renovation costs will ultimately impact the amount of your SmartHome Insurance premium paid after purchasing this insurance product. So, make sure you calculate carefully and trust PT AXA Insurance Indonesia with reliable home insurance for maximum benefits when you need it!

Referensi:

https://properti.kompas.com/read/2012/06/05/12200780/~Tips~Umum?page=all
https://www.mapei.com/id/en/blog/detail/blog/2023/12/04/5-manfaat-perbaikan-rumah-guna-tingkatkan-nilai-properti
https://crona.id/pentingnya-renovasi-rumah/
https://id.onduline.com/id/konsumen/planning/semua-kategori/artikel/blog/area-rumah-yang-paling-sering-di-renovasi-apa-aja-ya
https://www.lalamove.com/id/blog/tahapan-renovasi-rumah/
https://www.mitra10.com/blog/biaya-renovasi-rumah-per-meter