Whether you are a do-it-yourselfer or prefer to pay a professional contractor to renovate, you will need to consider some things before you start. Your first call regarding your renovation should be to your insurance broker; you need to clarify your existing coverage and what coverage is available to purchase during the renovations. In your conversation, different obstacles might come up with your current policy, such as limited coverage for being under construction, no coverage for materials/tools or concerns around potential changes to by-laws in your area.
There are many options that you can consider to cover your home during renovations: a builders‘ risk policy, an endorsement for coverage while under construction, added and/or by law coverage to name a few. Also, you need to understand if you are hiring a friend or contractor, what the implications are for you as the homeowner, and what the liability section of your policy will cover. What happens if a worker is injured on the job in your home?
Are you planning on increasing the footprint of your home during the renovation? It is important that your insurance broker is aware of any changes to your home, as this impacts your replacement coverage amount. For instance, your unfinished basement could cost $150 per square foot to replace while your finished basement could be $250 per square foot or higher.
Were you also aware that home renovations could affect the price that you pay for insurance? Upgrading your roof, furnace, plumbing or electrical could reduce the cost of your insurance.
Remember to contact your insurance broker prior to your renovations and again after your renovation is complete to ensure that you have adequate coverage for your home. According to the non-profit National Fire Protection Association, property losses from fires in one and two family homes during construction or major renovations increased 42% to $199 million from $140 million between 2002 and 2005. You need to verify that you are properly insured and don‘t leave the insurance coverage to chance.
Sources: Insurance Bureau of Canada