If you’re about to plan a renovation, there’s one thing you can’t forget. In fact, this one step is more important than you might realize.
Before you begin, you need to renew your home insurance.
What is the cost of your planned renovation?
Your home insurance policy is designed to cover the replacement cost of your home. Many policies offer a guaranteed rebuilding cost endorsement, but your home must be insured to 100 per cent of the rebuilding value. A renovation, as you know, could increase that value; and thus your contract must be updated in order to ensure proper protection.
What exactly is being done?
Your renovation could be maintenance-related and focus on replacing the roof, the windows or the hot water tank. These updates, as brokers call them, could actually reduce your insurance costs. You may be finishing your basement. If I knew in advance that my clients were finishing their basements, I would suggest including ways to minimize the possibility of suffering a water damage loss.
Will you be living in your home, or will you be moving out?
Most home insurance policies require that the home remain occupied while it is insured. The reason for this is that homes that are occupied are less likely to be broken into and more likely to be well maintained. If you have to leave your home for an extended period of time while renovations are being made, you can request a vacancy permit from your insurer. Vacancy permits may cost a few extra dollars, but they allow you to maintain coverage while you’re away from home.
Is there structural work being done? An addition?
If it is a large project, or involves structural changes, it may be desirable to place a Builders Risk insurance policy to cover all materials that will go into and form part of the finished project. Also, the existing home insurer may not agree to remain on-risk during the construction phase, in which case we can cover both the construction materials and the home during construction.
Have you engaged engineers or other professionals as needed to review plans?
You need to make sure that your contractor has insurance. You should request a copy of their policy and allow your insurance broker to review it. Do not allow an uninsured contractor to do any work on your property!
You may be liable for injuries to workers on your property. If a renovation worker or anyone else is injured on your property, you may be liable for costs and damages relating to that injury. You should also review the amount of liability coverage you have. It may be worthwhile to increase your coverage during the renovation period just in case something happens to a third party on your property.
You should also make sure that all renovations are done to building codes. After all, you want your home to be as safe as possible. If your home is an older one, renovations may uncover a potentially hazardous building material or construction technique, such as galvanized plumbing or other materials that don’t conform to the current building code. Some of these changes may significantly affect the scope and duration of your renovation, and therefore your insurance coverage.