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Taking on a home renovation? How exciting! Whether you’re remodelling the kitchen, adding to the master suite, or finally revitalizing the basement, renovations are a big deal and demand careful planning. Essential to this process is evaluating your current home insurance coverage. In today’s blog, we’ll explore how home renovation projects impact your insurance and how to ensure seamless integration between the two, guaranteeing full protection once the remodelling plans are finished.

Renovating a Home: What Statistics Show 

Before exploring how renovations affect your home and property insurance, it’s important to determine the type of renovation you’re undertaking. With many of us still predominantly working from home or adopting a hybrid schedule, investing in home renovation projects can enhance comfort and improve our quality of life. Each year, the Ontario homeowners’ renovation intentions survey, conducted by RenoAssistance and the Association des professionels de la construction et de l’habitation du Quebec (APCHQ), gathers insights into homeowners’ renovation habits. The 2023 survey reveals that two-thirds of homeowners plan to carry out renovations worth at least $5,000 within the next three years, despite increases in inflation and interest rates. Here are some additional insights gleaned from this data. 

Exterior Vs Interior Renovations

Interest in outdoor renovations has remained steady, with 40 percent of homeowners aiming to complete such projects by the end of 2025. Among these projects, the most common include work on the deck, patio, or balcony (37 percent), followed by landscaping (30 percent), doors and windows (27 percent), roofing (23 percent), and driveways (22 percent). However, interior renovation projects still dominate, with 82 percent of survey respondents planning some form of indoor renovation in the next three years. Flooring tops the list at 32 percent, followed by major bathroom renovations at 28 percent and minor ones at 23 percent. Kitchen remodelling is also a priority, with 27 percent planning major renovations and 18 percent minor ones. Additionally, 26 percent are considering renovations to their basements. Who handles the renovation is also crucial. Sixty-four percent prefer licensed contractors, while only 29 are willing to do it themselves, and 22 percent rely on family members or 18 percent on handypersons. The main reason for choosing licensed contractors is the assurance of quality work, cited by 77 percent of homeowners. Working with a licensed contractor, trained and certified, helps alleviate concerns associated with DIY projects.

Will My Remodelling Plans Be Covered?

Your home renovation projects might not automatically be covered by your current insurance policy. This means that any upgrades you make could leave you underinsured and vulnerable. Even if it’s just a DIY project with you and your partner, it’s important to reach out to your insurer beforehand. This ensures that you maintain coverage and keep your policy up to date. For major renovations, like completely revamping an older home to match modern standards, you might need to switch to a building under construction or builder’s insurance policy. Keeping tabs on your remodelling plans involves making sure you have enough insurance coverage. If you’re hiring a contractor, it’s also essential to check their insurance. Look for sufficient liability and worker’s compensation protection to safeguard yourself and your project. 

Insurance for Home Renovations: Is it Necessary? 

So, do your home renovation projects need insurance? Well, it all depends on the projects you’re planning, but in most cases, the answer is yes. Whether you’re envisioning changes inside or outside your home, it’s vital to touch base with your insurer. There are two main reasons for this. First, your current insurance coverage might fall short if someone gets injured during the renovation work. And secondly, these upgrades could bump up the rebuilding cost of your property, potentially leaving you underinsured. While you’re chatting with your insurance provider, ask about any extra coverage needed for your new additions. For example, adding a pool or hot tub increases risk and could raise your monthly insurance premiums. It’s better to know about these adjustments upfront to avoid surprises later. It’s also important to remember that if you neglect to tell your insurer about your renovation and then proceed to make a claim, it may not be accepted. Transparency is key– always keep them informed.

How Do Home Renovation Projects Affect Home and Property Insurance 

Homeowners insurance is there to protect your house and belongings from various risks like fires, storms and theft. If your home gets damaged or destroyed, your insurance will cover the costs to rebuild it and replace the belongings. But here’s the thing: some home renovation projects can actually increase the amount of money it would take to rebuild your home. This might make you need more coverage than you currently have. For instance, let’s say you remodel your old kitchen with fancy new appliances and cabinets. That could raise the cost of rebuilding your home and replacing its contents if something goes wrong. So, to fully protect your newly renovated kitchen and the rest of your home, you might need more coverage. On the other hand, some renovations can actually lower your insurance costs and make your home safer. Let’s look at each of these a bit further:

Renovations that can lower costs 

Believe it or not, some renovations can lower your insurance premiums. Here are a few common examples: 

• Alarm and video security systems: Adding security cameras, alarm systems, or motion sensor lights, can improve your home’s safety and reduce your insurance rates.
• HVAC systems. Out of with the old and in with the new– upgrading your heating and cooling systems to more efficient models can help you save on both energy bills and insurance costs.
• Updated plumbing and wiring. Older plumbing and wiring pose risks, so updating them to meet current safety standards can lower your insurance rates. Installing additional sewer backup insurance or a backwater valve can also help.
• New roof. Replacing an old roof with a new one can lower your insurance costs by 10 percent or more. 

Renovations that can increase costs 

You probably saw it coming– the renovations that can make your home’s value soar but also raise your insurance costs. But don’t worry these increases aren’t necessarily a bad thing. They’re just to ensure that your home’s value is accurately reflected, so at the end of the day, you’re fully protected.

• Pools: Whether it’s above-ground or in-ground, that dream pool you’ve been eyeing for years can increase your monthly costs due to the added liability.
• Home-based business: Converting a household room, like a bedroom, basement or garage into a home office or workspace will require additional home-based business insurance.
• Additions: Any time you expand your home’s square footage, your rates are likely to go up because you’ll need to increase the replacement value coverage.
• Unique design features: If you’re planning to include custom work or unique features added to your renovations, keep in mind that they may also require additional protection, depending on what they are. 

Policy Changes to Consider for Home Renovation Projects 

• Adjust the amount of coverage needed to rebuild your home. The home insurance required to rebuild your home in the event of a catastrophe is likely to change after your renovation. Make sure to send your receipts and other important documents to your insurance company so they can accurately adjust your coverage.
• Raise your liability coverage limits to cover the renovation. Liability coverage helps protect you if someone who doesn’t live in your household gets injured during the renovation. This can be especially important during DIY ventures.
• Increase your liability coverage limits after the renovation. If your renovation includes additions like a swimming pool, you’ll want to consider increasing your liability coverage permanently.
  
• Increase your coverage for personal possessions. Did your renovation include the addition of some expensive items? Consider bumping up your personal property coverage limits to ensure they’re fully protected.
  
• Add dwelling under renovation coverage. This coverage protects the building materials on-site or in transit to your property.
• Add vacant home insurance. Depending on your remodelling plans, you might live somewhere else for the time being. If you’ll be away for more than 60 days, vacant home insurance can help. This coverage ensures you’re protected even if damage occurs while you’re away and goes unnoticed for a while. 

Insurance for Home Renovations: What Changes if I Hire a Contractor? 

When hiring a contractor, it’s essential to ensure they have the right insurance coverage. They should possess liability, property, and workers’ compensation insurance. Request to see their certification as proof. If a contractor lacks adequate insurance, don’t hesitate to seek out another professional who does. While completing the renovation, if a contractor accidentally damages your home, their insurance may cover the repairs. However, your insurance might step in to address damage caused by faulty workmanship. For instance, if a plumbing mistake leads to water damage, your home insurance may cover it. Now remember, your policy won’t cover poor workmanship itself. For example, if tiles are improperly installed, you can’t file a claim. If the contractor refuses to fix the issue, legal action may be necessary. It’s essential to clarify these aspects before starting any renovation project.

Tips to Nail Your Home Renovation Projects

What’s Better for Renovating a Home: a DIY or a Contractor?

If you’re just updating a few fixtures, a DIY might be fine. But for a complete space overhaul hiring a contractor is wise. Here are tips for hiring one:

• Make a detailed project list to avoid extra costs from changing plans mid-project
• Set a clear budget
• Get recommendations from friends and family
• Ensure workers and independent operators have workplace safety and insurance coverage, though some exceptions exist. For more information and to check coverage, contact the Workplace Safety and Insurance Board (WSIB)
• Get written estimates from at least 3 contractors
• Check if tradespeople are certified by the Skilled Trades Ontario
• Never accept an estimate without having the contractor first inspect the area
• Consider local companies for easier follow-ups and reference checks
• Keep in mind, that a good contractor will ask a lot of questions so they can fully understand your project. A deal that sounds too good to be true likely is.
• Interview multiple contractor candidates. Find out exactly what types of services they offer, if they’ve done renovations like yours before, if you can visit any current projects, and company history. Also, discuss qualifications, references, estimates and any suggestions they may have for your home renovation project. 

Beware of Common Home Renovation Scams 

If you’re hiring a contractor, watch out for these common home renovation scams:

• The Door-to-Door Game: In this con, salespeople may offer you deals on the spot, claiming they’re in the area with materials and equipment. They might pressure you to sign contracts immediately or offer free inspections that lead to costly repairs.
• The Disappearing Contractor: The Houdini of contractors, these con artists take large cash payments from homeowners for materials but never start or finish the job. You can easily avoid this by keeping down payments to a minimum of 10 percent and never paying in full before the job is done.
• The Paper-Free Deal: If a contractor lacks the proper paperwork, whether it be estimates, contracts, professional licenses, or building permits, it’s a red flag. Avoid cash deals and ensure everything is documented. Legitimate companies comply with the law and provide the necessary paperwork for your protection.

Renovating a Home With Peace of Mind 

Insurance for your home renovations doesn’t have to be complicated. Let Acumen Insurance be your guide! We can help you determine if your existing coverage is enough or if additional home and property insurance is needed. Our team of professional brokers will make sure you’re fully protected so you can enjoy your new renovation worry-free! Get one step closer to hammering out your home renovation– learn more about the different home insurance coverage types by booking a consult with one of our insurance brokers today.