RemodelingHome renovations can affect insurance

Summertime in Canada almost inevitably is synonymous with home renovations. Drive through any residential neighborhood and you’ll likely see refuse bins on front lawns, graders, work trucks and trades people working.

According to Canada Mortgage and Housing’s home purchase survey, some 1.7 million households surveyed performed some form of renovation in 2011 and renovation spending across the 10 major centres surveyed amounted to $20.9 billion.

The vibrant home renovation market is being fuelled by low interest rates and government tax credits.

“The continuing drive to renovate has been supported by historically low interest rates and sustained house price gains which have facilitated household borrowing,” says a recent Canadian renovation market report by Scotiabank Economics. “Temporary government renovation tax credits introduced in the wake of the 2008 recession also fuelled spending and likely pulled forward some projects.”

While renovating your home may improve your lifestyle and add value to what for most Canadians is their largest single asset, the majority of Canadians may not be aware of the insurance implications of giving their living space a facelift.

“Whether you’re installing water-efficient plumbing or simply new cabinetry, before you pick up a hammer or drill it’s important to understand and learn more about the insurance implications of upgrading your home,” says Dave Minor, a vice president at TD Insurance. “While being handy around the house is convenient for upgrades such as painting or installing crown molding, more challenging projects like tackling the electrical work yourself could actually invalidate your insurance policy.”

Fifty-six per cent of homeowners incorrectly believe they always be covered by their original home insurance policy while their home is being renovated and 24 per cent are unaware that moving out for more than 30 days during renovations requires a policy update, a recent TD Insurance survey discovered.

Upgrades requiring extensive work such as adding an extension on your home may require you to change your entire policy to a building under construction. If you’re not living in your home during renovations it becomes an easier target for thieves and undetected water damage and your insurer may require you to secure a vacancy permit if you move out for more than a month, Minor says.

Although contractors are professionals, accidents do happen. However, 41 per cent of homeowners incorrectly believe that if a contractor is hurt on their property while working they will not be liable.

“If a contractor or their employees are injured on your property you could be liable for their medical bills, lost wages or damages for pain and suffering – all out of your own pocket,” Minor says.

He recommends asking to see a public liability insurance certificate before choosing a builder. The amount of insurance coverage they have will depend on the type of renovation, the number of employees and cost of the renovation. The higher the limits of coverage the more protection you have.

Many homeowners don’t know the types of renovations that can impact their premiums. Some simple ones such as security devices, alarm systems, deadbolts or fixing your weathered roof may decrease your premiums while others, such as installing granite countertops or expensive appliances, can increase them.

“Remember, anything that may impact the value of your home or probability of a claim will also affect what and how much insurance coverage you need,” Minor says. “Although waterproofing your basement may not be as exciting as new stainless steel kitchen appliances, these types of renovations can help protect your home and belongings. It’s always a good idea to talk to your insurance provider to understand more about your coverage.”


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