Why Your Insurance Company Cares About Your Reno
Housing upgrades can leave you underinsured, so it's important to contact your home insurance before you start a renovation.
Home renovations are trendy right now, fuelled by popular DIY shows. But they also involve liability that can affect your home insurance. A lot of homeowners get caught up in the excitement and forget to think about their insurance policies — then find themselves underinsured or in violation of their coverage. Neither is a great place to be, but it's easily avoidable if you're upfront with your insurer before you start.
Here's the upside: not all housing upgrades make your insurance more expensive. Some — like replacing or upgrading your electrical system — can actually reduce your costs. And if an upgrade does increase your policy price, it's likely because you're increasing the value of your home, which will serve you well down the road.
You Might Need Extra Coverage While You Build
Before you get started, realize you may need to purchase an add-on policy to protect you during renovations. A major home renovation means potentially exposing your home to the elements and the risks that come with construction. You may need things like builders' risk insurance or contractors' insurance to protect you if property damage or employee injuries happen during the process.
If you need to live elsewhere during the remodel, you may also need vacant home insurance to protect your home. Many insurance plans are void if you're gone for more than 30 to 60 consecutive days.
Adding Square Footage
If you're upgrading your home by adding a new bedroom, playroom, home office, or a mother-in-law suite over the garage, you'll need to contact your insurance company to talk about a new evaluation of your home's worth. Any time you add square feet to your property, you increase its overall value — which is excellent long-term, but also means you probably need to increase your insurance coverage.
Swimming Pools
Swimming pools are a tricky addition. They're considered an 'attractive nuisance' by many home insurers. While pools instantly add value to homes in many regions, they also add instant risk that insurers have to consider.
You should contact your insurer before the pool installation to find out the added costs to your policy and their own requirements. Some insurance companies won't cover homes with a pool. Others will demand that you install a fence or take other safety measures to minimize risk.
Electrical or Plumbing Upgrades
Not all housing upgrades increase the cost of your policy — some may decrease it. Removing a pool, for example, will often lower your home insurance costs. By the same token, upgrading or replacing an aging electrical or plumbing system in your home will add value to your home and decrease your home insurance policy costs.
Before You Start
A quick call to your insurer before you renovate can save you from being underinsured or accidentally voiding your coverage. And if you're pulling equity from your home to fund the work — through a refinance or a HELOC — let's make sure your insurance still covers what you're building. Reach out to [sayhello@hellomortgage.ca](mailto:sayhello@hellomortgage.ca) and we'll help you think through the whole picture.
