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Home insurance is an important tool that can protect your home in the event your home is burglarized, vandalized, or damaged by a natural disaster or nefarious actions by others. Any damages you suffer can be compensated with a home insurance policy. 

However, will your insurance policy cover you while you’re renovating your home? Better yet, do you need renovation insurance to make sure everything is covered?

Does Regular Home Insurance Cover Home Renovations?

Anything can happen when you’re doing extensive work on your home. Workers can get hurt on the job, damage can be done to your home during construction, and theft is more likely because your home is probably less secure than normal. 

While some insurance companies include renovation work in your home insurance policy, others explicitly exclude it. As such, it’s important to find out whether or not your average home insurance policy covers renovation.

What Type Of Home Insurance Covers Renovations?

Home Insurance and builder’s insurance are typically two types of property insurance policies that would be required to provide the appropriate coverage when you are renovating your home: insurance to cover your home and belongings, and builder’s insurance. The latter form of insurance covers homes that are under construction and protects against damage. 

It should be noted, however, that many regular home insurance policies may not provide coverage if the project is valued over a certain amount, often around $50,000. If your project is extensive and requires structural changes, you may need to revamp your policy from a standard policy to one that deems your home officially under construction.

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Why Is Renovation Coverage Important? 

Would your home be covered for damage done from leakage through the roof while it was being repaired? Will a gas leak be covered if a line is ever accidentally hit? Or would theft be covered if your home was left unsecured while replacing windows and doors? 

These are just some examples of things that can happen while your home is being renovated. That’s why it’s so important to verify what is covered and what isn’t under your regular policy.

Home Insurance, Renovations, And Being Away From Home

If you are away from your home for more than 30 days while the project is taking place, your insurance company should be informed, as this could put you in violation of your policy. In this case, you may require a vacancy permit, which can cost you a little more in monthly premiums. 

Can A Home Renovation Increase Your Home Insurance Rates?

Your insurance policy could be impacted if your home’s value or structure changes as a result of your renovation. If that happens, you may need to revise your home insurance policy to make sure that it reflects your home’s new value.

The size and cost of your renovation will play a key role here. For small projects, your current policy may still provide adequate coverage. For instance, if you’re installing a new bathtub or vanity, you’re not making a massive change to your bathroom or home. In this case, your home insurance policy may cover you.

For larger projects, on the other hand, your home insurance policy may have to be modified or added for jobs that are much more significant and expensive, especially if the structure of the home is being drastically altered. 

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Types Of Renovations That Can Affect Your Home Insurance Rates

Here are some ways that your current home insurance policy may be affected based on work being done. 

Types Of Renovations That May Increase Your Home Insurance Rates

  • A Pool – Pools are an extra cost and can cause a lot of damage. As such, this can increase your insurance rates. 
  • Major Room Upgrades –  Any major room upgrades, especially the bathroom or kitchen can lead to increased home insurance costs. 
  • Custom Work – If you add any unique designs or features to your home such as a skylight or an outdoor living space, it may also increase your rates.

Types Of Renovations That May Decrease Your Home Insurance Rates

  • New Wiring – Electric wiring and plumbing issues are common claims with insurance companies. Updating them to code can help lower your insurance costs. 
  • New Roof – Upgrading your old roof could decrease your home insurance premiums as newer roofs are safer, and less likely to leak, or be damaged by the weather. 
  • Security-Related Renovations – If you add certain security features to your home such as a monitored fire alarm or security cameras, it could decrease your insurance rates. 

Things To Consider Before Renovating Your Home

  • Speak To Your Home Insurance Provider – Before you make plans to renovate your home, be sure to give your insurance company a heads-up. That way they can inform you whether or not you will be lacking any coverage as a result of the work you plan to undertake.
  • Don’t Leave Your Home For Long Periods Without Extra Insurance – If you are planning to be out of your home while it is being renovated, your policy may become void if it is vacant for more than a specified period of time. Be sure to look into unoccupied home insurance if you don’t plan on being home while it’s being renovated. 

Final Thoughts On Renovation Insurance

There are so many things to consider when it comes to renovating your home, from the plans, to the permits, to hiring contractors and beyond. But one thing you may not have thought about is your home insurance policy. Review your current policy to verify if all construction will be covered. If not, you may want to revamp your policy or consider a new one to ensure complete coverage during renovations.

Renovation Insurance FAQs

Can renovations impact my home insurance claims?

If your renovation project will substantially change the structure of your home. You need to notify your insurer, otherwise, your policy may be void. 

If a worker is injured during the renovation, does my insurance cover them?

You could be liable for injuries caused to contractors on your property. The more coverage the worker has, the more protection they will have if they are hurt.

Will a home renovation increase my home insurance rates?

Yes, home renovations can increase or decrease your home insurance rates. Whether it impacts your rates, depends on the type of renovations made. Depending on what types of upgrades you add to your home, it can lower your yearly costs. Savings are typically seen in projects that add safety to your home, such as new wiring in a heritage home or security systems.

Is home insurance mandatory?  

Home insurance is not mandatory in Canada, however, if you’re looking to buy a home, odds are your lender will require a home insurance policy in place before they finalize your home loan.

Do I need builder’s insurance? 

You may need builder’s insurance if you are planning to do the renovations on your own. Otherwise, if you are having a contractor take care of the work, make sure they have their own insurance policy before starting the job.
Priyanka Correia, BComm avatar on Loans Canada
Priyanka Correia, BComm

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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