Does house insurance cover unconsented work?

The distinction that matters is causation. If a storm takes the roof off a house that happens to have an unconsented deck, the deck is unlikely to trouble the claim. If a fire starts in wiring installed without certification, or a leak springs from plumbing that was never inspected, the insurer will look hard at whether the unconsented work caused or contributed to the loss, and policies commonly allow a claim to be declined or reduced in that situation. Work that was also restricted building work done by unlicensed people compounds the problem. Policies differ, so the wording of yours is the only authority on yours.

Insurance runs on the information you give. Answer the insurer's questions truthfully when taking out, renewing or amending cover, and volunteer anything you suspect is material, because consequences of non-disclosure can reach beyond a single claim to the policy itself. If you are not sure whether the sleepout counts, the safe move is to tell the insurer and let them decide. An awkward conversation now is cheaper than a declined claim after a fire.

Make the insurance conversation part of due diligence, not a settlement-week surprise. Ask the insurer whether they will cover the property as it stands and on what terms, before you go unconditional. The LIM and council property file show what was consented, so comparing the file with what exists on site tells you the size of the question you are asking the insurer. If the work is significant, a price adjustment or a vendor undertaking to obtain a certificate of acceptance can be negotiated as part of the deal.

Some past work can be regularised with a certificate of acceptance from the council, which confirms the work appears to comply with the Building Code even though it was done without consent. Electrical and gas work can often be inspected and certified after the fact by licensed people. Keep every certificate and invoice from licensed trades, because a documented house is an easier house to insure and to sell. For anything beyond the simple cases, the people to brief are your insurer and your lawyer, in that order.