25 August 2021

Do home renovations affect your home insurance?

Since home renovations have grown in popularity during the pandemic, contractors have been busy helping Canadians realize their home’s full potential. But what many homeowners may not be aware of is how home renovations might affect their home insurance. Depending on the type of work being done, homeowners may need to reach out to their broker to find out what implications the work may have on their home insurance.

For starters, if you’re planning to do any renovations which exceed $5,000, you must advise your insurance company. Certain types of home improvements could even change the replacement cost of your home, or add elements of risk that could raise your insurance rates (like a fireplace or an inground pool). Here’s a list of the top 5 home improvement projects you should always inform your broker about.

  1. Swimming pools and trampolines
  2. Updating your roof, windows and doors
  3. Finishing your basement
  4. Remodeling your kitchen
  5. Installing decks and porches

Renos that lower your rates

Many people assume that notifying their broker about work being done on their house will inevitably raise their insurance rates premiums. While this can be the case, some home improvements can actually lower insurance premiums by reducing the risk of future claims.

Adding or upgrading a security system, for example, may lower your home insurance rate. Other renovations, such as upgrading your roof, windows and doors or installing a sump pump may prevent weather-related damages to your home in the future. Aside from these, here’s a list of the top 5 renovations that could lower your premiums.

  1. Installing a sewer backup valve
  2. Installing a centrally monitored fire alarm system
  3. Upgrading your plumbing
  4. Upgrading your electrical
  5. Installing a fence around your pool

Do I need construction insurance for renos to my property?

This, again, depends on the type of working being done. Often times, liability insurance is necessary when you have contractors working on your property. Home insurance policies already include liability coverage in most cases, but the risks that are associated with the specific renovations may require you to upgrade your liability coverage.

Some risk factors to consider when deciding if you need construction insurance:

  1. Changes to your home’s layout
  2. More people coming and going on the property
  3. Dangerous objects exposed, such as nails or uncovered holes
  4. Missing staircases or walkways
  5. Electricity being disabled temporarily

None of these factors necessarily guarantee a need for builder’s risk/construction insurance, or mean that your insurance premiums will increase after the renovations. But it’s important to advise your broker about the specifics of the work being done, so they can ensure you remain covered and let you know if you need to alter your home insurance in any way.

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