Why You Should Inform Your Broker About Home Renovations

A home renovation is a taxing project, with the average renovation in Ontario costing $100-$200/square foot. Major renovations require plenty of time, money, and effort to complete. First, you have to make a plan of what you want. Then, you have to interview and rigorously screen potential contractors and lay out your plans for them, in addition to determining a payment schedule. It’s a lot – and it can be overwhelming. One thing you cannot miss out on when planning to undergo a major home renovation is informing your broker or home insurance company about the plans you are looking to bring to life. Why? We’ll explain.

Your home insurance policy is designed to cover your home as it stands. That includes its replacement value, as well as any additional features, like swimming pools, signage, landscaping, garages, etc. When you actively make changes to your home, i.e.: finishing a basement, remodelling your kitchen, adding a wood deck to your backyard, you are altering your home from how it was when you first purchased your policy. This means that the overall value of your home has changed as well. Here is why you need to inform your broker about home insurance renovations.

Your home’s replacement cost has changed.

The biggest thing that can come with a home renovation and its consequential insurance implications is that your overall home’s value has changed, in addition to your home replacement cost. Renovations – depending on the type and how they are achieved – can increase your home’s value. Your home insurance policy needs to be altered to reflect that new value, otherwise, if anything happens to your home, then your renovations would be covered. There’s nothing worse than having a claim denied to repair your home’s recently remodelled kitchen after a house fire and losing all that money you sank into the renovation. When you contact your insurance broker, you can review and update your existing policy to reflect any additions or extensions, thus ensuring that you have full coverage in the event of a disaster.

Because things happen during renovation.

During a major renovation, accidents can happen. You should always ensure that, if you are hiring someone else to do your renovations, they have insurance to boot. This means that any contractor on the job has sufficient contracting insurance – beyond just covering their equipment and tools. If you already hired a contractor who may not have sufficient insurance or you simply want the added protection, you should consider getting a builder’s risk policy to cover your property from theft and damages during renovations. Homes that are being renovated may be easier to burglarize because entry points may be left unlocked and, depending on the scale of the renovation, we may not be living at home during this time.

Undocumented alterations can void your policy.

Failing to inform your broker of any insurance-qualifying events – be that a renovation or the addition of a tenant – can result in your home insurance being voided. There are a few situations where your home insurance could be voided altogether, including leaving your home unoccupied and utilities shut off for thirty days or longer, failure to make payments, and major renovations that result in a change in risk. An example of a major renovation resulting in a change of risk might be the addition of a swimming pool or changing your metal roofing to a “green roof.” Nondisclosure of these alterations may put a policy at risk of being voided.

Some renovations may reward you with a discount.

One of the most important reasons for informing your home insurance broker of recent renovations is that it can actually qualify you for a discount. Renovations, depending on the type and what they entail, can boost the value of your home and save you money on your premiums. Examples of renovations that can reduce your home insurance costs include:

• The addition of home security systems, such as alarms, keypads, cameras, etc.
• Installing a sewer backup or emergency water shutoff.
• A new roof with more durable materials.
• Updated home systems – electrical, plumbing, heating, or ventilation.

That being said, not every renovation may result in a home insurance discount. Some renovations will increase your insurance premiums due to the higher replacement cost, especially with the most popular renovations being kitchen remodels or bathroom makeovers. These require intensive plumbing upgrades that can rack up the cost. That doesn’t mean you should avoid informing your broker, however. It can be tempting – no one wants to pay more for their insurance if they don’t have to – but it’s better than risking all your renovations going to waste if you make a claim and your insurance provider finds out you have made undisclosed modifications.

Taking on a new renovation project can be as exciting as it is stressful, so make sure that when you are in your planning stages you save some time to call up your insurance broker and discuss the modifications. Who knows? Maybe you’ll save some money – but even if you don’t, it’s always better to be safe than sorry! Good luck with your newest renovations.