How Home Renovations Affect Your Insurance
Statistics show that home renovations can be costly; however, they can sometimes increase the value of a home.
Whatever time of year, homeowners should check with their insurance provider to make sure their home insurance coverage will remain intact during the renovation period and after the renovations have been made.
Insurance companies may be interested to know about home renovations as this may affect your policy.
Factors that may affect your policy include:
- Renovations can increase the value of your home.
- Liability: Workers (such as builders or construction personnel) working on your property – you may be liable for any injuries that they may suffer.
- Vacating your home may leave you un-insured (most insurance policies exist for when tenants are occupying the home).
- Remodelling the home may change the pre-existing coverage and will need to be updated to ensure all new additions are covered.
Insurance policies may even cover building materials while renovations are being made. Photographs made be required to show pre and post renovation additions. Once renovations have been completed, insurance premiums may increase or decrease depending on what specifically was done.
If renovations increase the value of your home, you will want that to be reflected in your insurance policy. Instead of being covered for a $200,000 home, you may now need coverage to insure a $300,000 home. Or on the flip side, renovations to remove mold or dangerous items such as asbestos might actually decrease your insurance premiums.
Planning Home Renovations? Be Sure to Review Your Insurance Policy.
A new poll indicates that while a considerable number of Albertans intend to refurbish their homes through some type of renovation, a fairly sizeable percentage of them fail to account for the Alberta home insurance repercussions of this type of activity.
According to the survey, which was conducted by Environics Research Group, when asked about whether they had reviewed their policy to see what their plan mentioned with regards to home upgrades, just 5 percent said they had done this. Additionally, only 13 percent of respondents said that they spoke to their insurer if they were uncertain about what their policy provided for.
The poll also looked into what homeowners assumed about their home insurance policy with respect to renovations. For example, it discovered that among Albertans, 53 percent of homeowners incorrectly believed that they are always covered under their standard plan throughout the course of the makeover work.
David Minor, an area insurance expert, said that while plans differ, as a general rule that’s not always true.
“Upgrades requiring extensive work, such as adding an extension to your home, may require you to change your entire policy to a building under construction,” said Minor. “And, if you’re not living in your home during renovations, it becomes an easier target for thieves and undetected water damage, which is why your insurer may require you to secure a vacancy permit if you move out for more than a month.”
Alberta homeowners often unfamiliar with which home upgrades can reduce insurance costs
Another mistaken belief some Albertans have is in regards to which home renovation can help lower their premiums. For example, the poll found that in roughly 20 percent of instances, participants to the survey were not aware that updating a home’s electrical system could make their insurance rates more affordable. In addition, nearly half of respondents said that they didn’t think installing granite countertops had an impact on rates one way or the other, when in reality they often do, depending on the policy.
Something else Albertans were occasionally misinformed about was their liability should a professional renovator or independent contractor be injured while working on the residence. The Environics Research Group poll revealed that close to 40 percent of Alberta homeowners falsely assumed that the contractor – or the company they work for – would provide for any injury that might result.
Ask your contractor about their insurance protection
To guard against potential issues, Minor recommends speaking with the contractor homeowners intend to work with in order to determine how much liability insurance they have. The homeowner’s immunity from liability often depends on the limits of their policy.
Albertans should not feel like they’re the only ones who may not be as clear about their policies as they ought to be. The poll was also conducted among several other Western provinces, such as in British Columbia. There as well, a mere 6 percent of British Columbians checked their insurance policy prior to having renovation work done and 17 percent talked to their insurer when the restoration project was completed.
According to the Insurance Bureau of Canada, the improvements that a homeowner has made on their home ultimately affects its insured value. Thus, if certain upgrades have been made that can be costly to replace if they’re damaged – such as granite countertops – policyholders may need to increase their coverage limits. It’s in their best interest to do this, as should they file a claim after a renovation has been made and the policy hadn’t been updated, the limits may not be adequate.