Mackay Insurance Blog
As the price of real estate continues to increase, more homeowners are choosing to renovate an existing home rather than trying to upgrade by moving.
This makes a lot of sense, especially if you like where you live and enjoy your neighbors and community.
But there is a crucial task many homeowners fail to do before launching into a remodel, and that is to alert their home insurer.
According to Canadian Underwriter Magazine, a mere six percent of Ontario homeowners thought to review their homeowner’s insurance policy before beginning their renovation project!
And just 14 percent of homeowners contacted their insurance provider to be sure their current coverage would protect them during the remodel.
In this post, learn about common myths, misconceptions and realities regarding homeowners insurance during home renovations.
3 Questions to Ask Your Home Insurance Broker
No homeowner likes to contemplate an increase in an existing insurance policy. But not asking the right questions at the right times can end up being a lot more expensive than taking the time to be sure your current policy is sufficient.
These are the three questions you absolutely need to ask your broker before launching into your home remodel.
1. Will my current homeowners insurance policy provide sufficient coverage while my home is being remodeled?
If you are planning to move out of your home temporarily while your renovation project is completed, this can impact your existing insurance policy.
This is especially true if you will be out of your home for 30 days or longer. You may need to change your home’s status to “under construction” or obtain a home vacancy permit in order to have coverage for perils like vandalism or theft while your home is unoccupied.
2. Will my policy protect me if a contractor, subcontractor or construction worker is hurt on my property while working on my home remodel?
The simplest answer to this complicated question is often “no.” You need to verify that your contractor carries a general liability insurance policy, and also that they are covered by workers compensation.
If you do the work yourself, obviously the risk of a contractor damaging your home or being injured is not a factor. However, this doesn’t change your need to notify your insurer about remodel plans. DIY renovations are still home renovations.
3. Will my homeowners policy need to be changed after I complete my home upgrades?
Did you know that some home upgrades can actually lower your future homeowners policy premiums?
Some examples include beefing up your home security system, installing extra safety lighting, upgrading your roofing or electrical system, upgrading to new energy-efficient appliances or windows, updating your plumbing or installing basement waterproofing.
Other upgrades, however, may cause your policy premiums to increase. In most cases, this is because the upgrades themselves increase either the square footage of your home or its overall value or both.
Examples can include installation of a pool or spa, expanding the square footage of your home, converting an unused room to a home office, adding on an apartment above your garage, installing expensive extras such as granite countertops and any customized one-of-a-kind upgrades.
If you are on the fence about certain upgrades, talking with your insurance broker can be a useful tiebreaker!
Be Sure to Read Your Policy Fine Print Before Starting Your Renovations
Every year, unhappy homeowners find out too late that they have voided their homeowners insurance policy by failing to notify their insurer before a remodel.
Some find this out when something is damaged during the renovation and they learn they are not covered. Others discover long after the renovation that the increased value of their home is not insured because their broker was never informed.
Unfortunately, these homeowners don’t have much recourse once they find out this requirement to notify was outlined in the fine print of their policy documents.
The moral of this sad story is to always err on the side of informing your broker!
What If You Run Into Trouble During Your Home Renovation?
If you have ever been through any type of remodeling or renovation project in the past, you probably know all too well that surprises often crop up once the project gets underway.
Sometimes these surprises occur when you go to file for a permit and discover the building standards have changed and you now need to make unanticipated upgrades to plumbing, wiring, insulation or other components of your home.
At other times, you may be surprised to uncover an unanticipated leak, crack, mold outbreak or other issue that you have to stop and address before your remodel can proceed.
In these cases, your project may take longer than you originally anticipated. Here again, it is vital to contact your broker right away to make sure you have the right coverage for as long as you need it during your renovations.
What to Do After Your Home Remodel Is Complete
Once your remodeling project is finished, it is essential to let your insurer know that your project is complete. You may need to change your home status back from a building under construction and adjust your limits accordingly.
If your remodel has changed the overall square footage, replacement value of items or resale value of your home itself, you will want to edit and update your homeowners insurance policy accordingly to stay fully protected.
In most cases, your policy premiums will not significantly increase, and as we’ve mentioned, some delighted homeowners have even seen their premiums decrease thanks to energy-efficiency, security or safety upgrades!
Get in Touch
Planning a home renovation and need to update your homeowners insurance coverage accordingly? Our friendly, knowledgeable team of insurance brokers can help!
Contact us online or give us a call at 1-888-853-5552.