Six Insurance Tips for Home Renovations

A home renovation is a chance to make some upgrades, breathe some new life into your abode, and potentially raise its property value. But home renovations of all sizes come with risks.

Whether you’re putting in new light fixtures or building the swimming pool of your dreams, it’s important to ensure your home insurance policy protects your investment. Read on to find out what you need to know about home insurance during your renovations.

Key takeaways

Many Canadians assume their home insurance stays the same during renovations, but this varies greatly depending on the type and scope of the renovation. It’s important to review your existing policy before starting any work on your home.
The details of your planned renovation can increase your home insurance rates.
Additional coverage for the duration of your home renovation is available, so you’re protected in case of personal injuries, lawsuits, or lost and/or damaged materials.
Speak to your home insurance provider about your plans before you start your renovations, so they can provide you with your coverage options.
Confirm your contractors are adequately insured before they start their work.

Six ways to ensure you and your home are protected during a renovation

1. Review your home insurance policy before starting your reno

Homeowner’s insurance typically protects your home and personal belongings against events such as fire, wind, and theft. But many insurance policies don’t offer protection during a home renovation. In the unfortunate event your kitchen reno causes a burst pipe that leads to water damage in your basement, for example, your insurance claim could be denied.

Make sure you look closely at your current coverage and limitations to avoid any unpleasant surprises. Consider factors such as deductibles and exclusions, and reach out to your insurance advisor at any time if you have any questions. It’s important to understand the breadth of your home renovation insurance coverage.

If you’re considering a major renovation, such as a first-floor addition or extension, removing a load-bearing wall, or opening an exterior wall, talk to your insurance advisor about a product that protects you against the risks associated with these types of major projects. RBC Insurance’s Major Renovation Endorsement, for example, protects not only your investment in your renovations, but also your entire home. Without it, uninsured work can impact the coverage of your existing home policy, leaving you vulnerable to significant risks and losses.

2. Notify your insurance provider about any upcoming renos

It’s essential—and with many policies, you’re actually contractually obligated—to keep your insurance provider in the loop. Before you start renovating, let them know the scope of work, the estimated timeline, and any significant changes you’ll be making to your home. Here are some things to keep in mind.

Cost to rebuild your home: Insurance rates depend on various factors, including the cost to rebuild your home exactly as it once was (this is called “replacement cost”). If you remodel and improve a part of your dwelling, it’ll probably raise your home’s value and, therefore, the cost to rebuild your home. These increased costs can be reflected in increased insurance rates.
Risk of extensive alterations: Significant renovations—such as converting a basement into a one-bedroom apartment—can increase the risk of damage to your home during construction. Your insurance costs may increase during the renovation period, then return to normal after the project is completed.
Risk of unoccupied homes: Renovations that require you to move out during the project will likely cause your insurance rates to increase. Empty homes carry more risk, because something could go wrong when no one is around to take action.
Benefit of protective systems: Putting loss-prevention systems in place, such as reinforced roofing, storm shutters, and burglar alarms, can reduce your home insurance rates. So can upgrading electrical, heating, and plumbing systems.

Your insurance company can help you figure out how to adjust your policy for adequate coverage during the renovation or let you know if you qualify for any discounts. You don’t want to be underinsured in a worst-case scenario, such as a flooded home or a house fire.

3. Get adequate coverage for renovation materials

There’s always a risk that the building materials and supplies in your home can be stolen or damaged during a renovation, so it’s a good idea to make sure your insurance policy covers these materials and supplies.

Building materials and supplies aren’t cheap, and the last thing you want is to pay twice for them. Extra insurance protection can keep your budget on track and lower the stress of unexpected incidents.

4. Understand what liability coverage is

Renovation sites can be dangerous with obstacles such as tools, raw materials, and cables, and surfaces can be uneven, unstable, or slippery. For these reasons, workers, visitors, and even passersby can slip or trip and fall, causing serious injuries.

It’s important to have enough liability coverage to help protect yourself against any possible lawsuits from accidental injuries that may occur during your home renovation. This coverage may pay for personal injury and can help cover your legal defence if you’re sued.

RBC Insurance’s Major Renovation Endorsement includes liability coverage (along with coverage for many other things). Speak to your insurance provider well before you start your renovation, so you know exactly what’s included in your policy.

5. Get your contractor’s proof of insurance

If you’re hiring contractors or subcontractors to work on your home renovation, ask to see their certificate of insurance. Contractors should have provincial worker’s compensation insurance to protect their workers if they get injured on the job. They should also have general liability insurance in case they make mistakes and/or cause damage to your home.

If a contractor accidentally burns down a part of your home, for example, their insurance will likely cover the fix—if they have proper coverage.

But the costs of injury and/or damage could fall to you if your contractor isn’t appropriately insured. It’s best to review your contractor’s coverage with your insurer to ensure there are no gaps. Consider hiring someone else if their coverage isn’t sufficient.

6. Keep records and receipts from renovation expenses

A paper trail can be your best friend in any home renovation. Safely store important documents such as contracts, invoices, and photographs, and record project dates. This documentation will come in handy if you have a dispute with your contractor(s) and need to file an insurance claim.

Your home is one of your most prized possessions. It’s better to be safe than sorry when it comes to protecting any investment you make in it.

Speak to one of our RBC Insurance Advisors to ensure your home renovation is adequately covered and protected against unexpected risks and losses.

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*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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