How home renovations affect your insurance

Construction season means more than commuting delays due to roadwork so if you have a renovation in the cards this summer, make sure you know how it can affect your home insurance policy.

More than half of Canadian homeowners believe their current insurance will cover their home while it’s under renovation, according to a 2013 poll from TD Insurance. Now if you’re just sprucing up the living room with a fresh coat of paint or new crown moulding, you’ll likely be covered.

But any extensive work—like adding a few feet of ceiling height, or adding a basement apartment (get your tenant to shop for renter’s insurance quotes), or finally getting rid of that knob-and-tube wiring—could invalidate your regular home policy unless you plan to buy coverage for a building under construction, which typically costs more. And it’s essential to tell your insurance provider about the renovation and buy any extra coverage you might need before you begin work. Here’s a quick list of how home renovations change your insurance policy.

Vacancy permit

Moving out for more than 30 days during a renovation can also void a regular home policy since it’s easier for thieves to target the property or for homeowners to miss, for example, gradually developing water damage. Sometimes, checking in on your home every day is enough to maintain the validity of your policy but in other situations, you might have to obtain what is called a “vacancy permit.”

Liability

It’s also important to consider liability. If a dinner guest or delivery person slips and falls on your property, your regular home insurance policy will cover medical bills, lost wages, and damages. But what happens if a contractor breaks a leg while on the job? Things get trickier when renovations are involved, for the simple reason that risk is much higher on a construction site. So it’s important to ensure contractors have their own liability coverage and workers’ compensation.

If you’re planning a do-it-yourself reno, you may still need to buy additional insurance since professional liability isn’t part of standard policies.

A change in coverage

On that note, if you’re renovating so you can start a home business, it’s important to let your insurance provider know. Depending on the type of business you’re in (freelance writers, not so much; home daycare operators, absolutely) you may need to purchase commercial coverage, which may be available as an extension of your home insurance policy.

Keep your insurer informed

Once your home renovations are completed and you’re ready to go back to a regular home insurance policy, make sure you tell your insurance provider about significant upgrades that have increased the value of your home. Having higher replacement costs may cause your premiums to jump. But you don’t want to enjoy your glossy new granite countertops for a couple of weeks, have them damaged in a grease fire and then realize they’re not covered.

How to bring down the cost of home insurance with renovations

Finally, since you’re already renovating, consider adding safety features to your home. They can bring premiums down and build future value. Sump pumps and backwater valves can minimize flood damage. A centrally located alarm system may reduce or eliminate break-ins and thefts. And in case of a fire, indoor sprinklers can cut save you a fortune, and even prevent the loss of your home.