How Do Home Renovations Affect Your Home Insurance Policy?
Summer is the time when many Canadians take advantage of the warmer weather and perhaps even some vacation time to renovate and upgrade their homes. The Canadian Mortgage and Housing Corporation (CMHC ) statistics show that in 2009, over 2.1 million Canadians initiated home renovations costing $1,000 or more. Home renovations can increase the value of your home, provide additional space, and help keep your home in good condition.
If you're planning a renovation make sure you inform your insurance company of your plans to ensure that your home insurance policy remains in effect during this time. Certain types of alterations to your property may affect your insurance policy and if something should happen you may find that your policy does not cover the perils you expected it to cover.
Renovations and your Home Insurance Policy
Here are some of the reasons your insurance company should be notified:
1. Renovations can increase the value of your home.
Your home insurance policy is designed to cover the replacement cost of your home in the event of a fire or other significant damage. Anything that affects the replacement cost of your home can also affect the cost of your premium and the amount for which you are insured. Make sure you inform your insurance company as soon as possible of any significant upgrades. They may require receipts to show that the work has been done.
2. Vacating your home can invalidate your policy.
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.
3. Extensive renovations may change the classification of your policy.
If you're making substantial renovations such as replacing an exterior wall or roof, your insurance company may change your policy to that of a building under construction, rather than a single family dwelling. The reason for this is that your personal belongings in the home are covered by your insurance policy as well as the building itself. If there's a damaged roof or missing wall that can affect the condition of the contents of your home, your insurance company may choose to exclude them from your policy during the renovation period.
4. 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. Before you hire a contractor, you should check with the Better Business Bureau and make sure that they have insurance for their workers. 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.
5. You never know what you may find.
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.
The best idea is to work closely with your insurance agent or broker and keep them informed of the extent of your renovations. If you have any questions, be sure to ask. Your insurance professional is there to help and can find any information you need.
Once your upgrades are complete, schedule an appointment with your insurance professional to talk about the changes and discuss whether your insurance coverage needs to be altered. This may or may not increase your current home insurance rate. If your rate increases remember that you always have the option of comparing your policy with other insurance providers. Comparison sites such as InsuranceHotline.com can help you do this within just a few minutes of your time. Even including your renovations, you may be able to get the same coverage at a lower rate.