Do You Need Home Insurance for a Renovation?

Home renovation dreams can become a reality after seeing designers, architects, and quotes to meet your budget. You’ve carefully selected your chosen contractors and started shopping for your materials – everything from that one-of-a-kind vanity to the live edge countertop, but if you haven’t spoken with your insurance provider, you’re missing a crucial step.

There are so many things to plan and think about before a renovation that people will often forget to update their status with their home insurance provider. Changes to your home mean that you’re changing what is insured on your contract and if you’re not informing your provider, they could deny your insurance claim when you need it most.

In fact, according to Canadian Underwriter magazine, only 6% of Ontarians looked into their policy before renovations began and only 14% followed up with their provider after the renovations were completed.

Home insurance during renovations: factors to consider

If you’re going to stay away from your home during your renovation, you should tell your home insurance company. Being vacant from your home for 30 days or more could be in violation of your policy. You need to ask your insurer for a vacancy permit, which may cost you an extra $30-$50 per month while you’re away. If something were to happen without a vacancy permit, you’d be in breach of your contract since most insurers don’t cover that long a vacancy. If your insurer doesn’t have an option for temporary leave, it’s time to shop for new home insurance quotes from providers who will.

READ: What is vacant home insurance?

If you’re doing major structural changes, you need to restructure your policy to make it a “building under construction” rather than standard home coverage. If your roof is not yet finished and rain pours in damaging your new hardwood, are you covered? You need protection in case of fire from an electrical surge, or a gas leak from a new furnace. There are several ways your whole home may be damaged in the process of a renovation.

During a renovation, you may be replacing exterior windows or doors, and while you’re waiting, plywood may be used in their place making it an easy point of entry for a potential thief to get inside. Does your home insurance cover theft or vandalism?

It’s important to read the fine print of your home insurance policy, says Romana King writing for MoneySense Magazine, “there’s a clause in the vast majority of home insurance policies that eliminate your coverage protection should you undertake a home renovation. So, if a pipe bursts during that bathroom remodel and ultimately destroys the floors on your second floor, you could find out that your claim is denied.”

You should also check with your contractor on what their insurance covers. If one of their workers is hurt or injured on the job site, they need to have provincial worker’s compensation that protects their workers in case of injury on the job. They should also have private insurance protecting their craftsmanship, their tools, and their liability to their crew over and above the woker’s compensation. If not, do you remember if your house insurance quotes had third-party liability coverage? Be sure to speak with your contractor – you don’t want them to need your protection.

Home insurance after renovations

After the renovation is complete, you should reach out to your home insurance company. Let them know what’s been done because your policy will need to reflect the updates. Upgrades typically increase the home's value, so you may need to purchase more coverage on your policy.  Let’s say you added a basement apartment – here are three ways this modification to your home will change your policy:

• If you plan to Airbnb your basement, there are a select few insurers that provide coverage. Other insurers may deny claims altogether because you didn’t tell them about your new business.
• If you’re renting out your basement, they also need to know because it changes the occupancy of your home. Your new tenant should get tenant’s insurance quotes because the contents of their apartment aren’t covered under your policy.
• The value of a home with a basement apartment goes up. What is the replacement value of your home now that you’ve completed the renovation? Home insurance providers will often determine the value of your home based on its purchase price, but in hot markets, that price may be woefully out of date. You need to make sure, in case of catastrophe, your home can be rebuilt to your standards.

The bottom line

In closing, before you get your drawings, have a conversation with your insurance company or broker about your intentions. If they’re not happy, or if it raises your premiums too much, you may need to shop for new home insurance quotes before you start shopping for your quartz countertop.

Photo by Petra Keßler on Unsplash

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