Summer typically signals longer days, patio season, outdoor adventures and quite often home renovations. While it’s never too early to begin your renovations, summer weather makes this the easiest time to get small or large home projects done.
Before starting any projects, you should talk with your insurance broker. At BrokerLink, our advisors can tell you if your project may impact your insurance policy. Adding value to your home may change your insurance needs. Plus, your advisor may be able to give you some professional insights on things that will benefit you, and other considerations you should be aware of. Keep reading to learn more.
Why speak to your insurance broker about your home renovation?
Before starting any large-scale renovations, you should speak with your advisor. Your home and belongings are insured at a specific amount, so making any changes may affect this. For example, updating your electrical wiring can reduce the chance of an electrical fire, and replacing old plumbing can reduce the chances of water damage caused by leaks and corrosion. In these cases, your insurance premium could be reduced. Finishing your basement adds value to your home, which means your rates may increase slightly, to reflect the replacement cost if any damage were to occur. Roofs, eaves troughs and other upgrades don’t add a lot of value to your home, or affect your premium but they’re important because they protect your home from damage.
Your BrokerLink advisor will make sure that any work you do factors into your insurance premium so that you’re covered should anything unforeseen happen.
Depending on the scale of the renovation, your broker may recommend that you purchase a Builder’s Risk Policy. A typical homeowners insurance policy doesn't cover dwellings under construction. Builder’s Risk coverage insures the value of a building during construction. The structure, materials, equipment and supplies are all covered under this policy if they are used to build part of the finished project. Construction contracts should be reviewed to determine if the contractor or owner is responsible to insure the project while under construction.
What if I don’t tell my insurance advisor about my home renovation?
Depending on the scale of renovation, failure to disclose major home projects could void your current home policy.
Renovations are tricky and unexpected damage may occur. Many insurance policies state that your policy will invalidate should you fail to notify your insurer. At the end of the day, your insurance brokerage is here to help you navigate the insurance waters so you know how to protect yourself.
Factors that may affect your current home insurance policy
What information should you provide to your insurance advisor if you’re going through renovations? It depends on the type and size of upgrade being done.
- If it’s large-scale like some kind of addition to your property, it’s quite likely that your advisor will want some more details such as the construction type, location, finishings, square footage etc. Since your renovations are likely to increase the value of your home, this information will make sure they’re properly covered.
- You should still consult with your insurance advisor during DIY projects. It’s important to correctly evaluate the coverage required for a project even when you plan to do it yourself. Remodelling something like your kitchen where there are different electrical outlets and pipes could be costly if something goes wrong.
Will a home renovation affect your home insurance premium?
It depends on your renovation. If you’ve remodelled your master bathroom, your premiums may increase to reflect the money spent on upgrades, so you are covered should any future damage occur.
Once the renovation is complete, talk with your advisor right away to update your policy.
If you’re wondering when to consult with your insurance advisor, ask yourself: Are you maintaining your property or are you adding value?
Much like vehicles, homes require regular maintenance, which includes the things you do to ensure continued functionality and to prevent damage. This could mean painting, simple landscaping, fixing cracks in your foundation, or touching up grout in your bathroom. While it’s important, it’s not increasing value. In these cases, your advisor doesn’t need to know.
This includes anything you do to add value to your property. Improvements include:
- Building a deck or adding a structure on your property like a shed or garage
- Upgrading plumbing and electrical
- Redoing your kitchen and bathroom
It’s important to notify your insurance advisor when you’ve added value to your home, as it may affect your home insurance premium.
When in doubt, give us a call! We’re here to help you - it’s better to be safe than sorry.
Does your contractor need insurance when renovating?
When you hire a contractor, there are many risks. Your contactor should have insurance coverage for their business, which ideally includes liability coverage.
For the most part, reputable contractors are comfortable disclosing these details to potential customers because any renovation projects should be adequately covered through their commercial policy and your personal one. Contractors should have:
- Protection for personal injury: Worker’s compensation covers employee’s wages whereas a personal injury policy is used to help with medical expenses, legal fees and any compensation towards someone who is injured on a job site.
- Damage Claims: Any legal or repair costs would be covered if the customer’s home or property were damaged in any way during renovations.
- Equipment/Tools Insurance: This will provide coverage in the event that any tools are damaged. It can also pay for equipment rentals.
As homeowners and contractors have different needs, insurance policies are beneficial to protect yourself and assets. Insurance is in place to give everyone peace of mind no matter their situation or unique needs.
DIY versus a professional contractor
||Usually cheaper as you’re not paying for labour. However, it could take you longer since you’re not a professional.
||Contractors cost more, but professionals with a good reputation are likely to complete your project much faster since more people will be on the job and it can happen during your work schedule.
||The quality of work may be lacking since you may not have experience or the professional equipment used for jobs such as tiling, landscaping and other home projects.
||Having the knowledge and correct insurance, codes and permits are things contractors will be aware of since a lot of work needs to be “up to code.” If you’re not aware of what that is, it could impact you when you want to sell your home or could be potentially hazardous.
Planning a home renovation?
If you’re planning a home renovation, BrokerLink can help ensure you’re covered! Give us a call today to learn about how your home renovation could affect your policy.
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FAQs for home renovations and home insurance brokers
Are contractors required to have insurance before starting a job?
Yes, contractors and other businesses require insurance in order to operate legally. This is to protect them and their customers in case of an accident, injury or other damages.
Do I have to tell my insurance broker if I’m replacing a sump pump and backwater valves?
It’s a good idea to let your insurance broker know as you may be able to save a few extra bucks every month on your policy. Plus, it’s never a bad idea to check in to ensure you’re protected against sewer backup.
Can upgrades in my home lower my future homeowners policy premium?
It depends what the upgrades are, but this is true in some cases. We typically see this when customers update various things in their older homes such as electrical wiring and pipes since you’re making your property safe.