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Consult with your insurance broker before starting home repairs

As springtime approaches many homeowners think about starting renovations to their homes, and some of which can be surprisingly large projects.  When considering a home renovation such as remodelling a kitchen, finishing a basement, adding a deck or patio, a new garage, or simply refreshing a bathroom having a quick consultation with your insurance broker is a smart move.  Depending on the current condition of a home and the scope of the project, the costs can range from a few thousand dollars to hundreds of thousands and could affect your insurance coverage should you have to make a claim.

One of the most important things to consider when embarking on a home renovation project is who is acting as the general contractor, the homeowner or some one else?  While this may not affect your home insurance policy in terms of rates, that policy will not cover you for any injury-related claim that happens to someone else.  The best practice is to ensure that a contractor is in good standing with the provincial Workplace Health and Safety board and that they are up to date with their WCB, Workers Compensation Board, coverage. 

Should the homeowner act as the ‘contractor’ and coordinate the efforts of independent sub contractors they may be responsible for provincial WCB premiums and benefits.  If the homeowner hires a contractor to coordinate and manage the project, they should also check that the contractor is in good standing with the provincial WCB.  Should the homeowner not check they could be liable for costs associated with a workplace injury.

While thinking about the contractor and the sub-contractors it’s also good to check that they have insurance for themselves as contractors or businesses. An important coverage would be ‘Completed Operations’ extension for work that is completed once the job or project has finished. This coverage is for property damage or injury to a third party after the operations or construction has been completed.

When it comes to the homeowner, different insurance companies deal with renovations in different fashions.  Some companies may require projects of a certain dollar value to be reviewed and others may consider the scope of work to the property the determining factor to review and change insurance coverage.  There is no clear-cut way to determine how your renovation will affect your insurance but there are some basic guidelines someone can follow.

If your renovation project is large enough to change the size of your home’s living space such as measured by square feet, it’s time to review with your broker.  If the renovation will change significant features to your home and will increase the replacement cost of the home, then reviewing coverage with your broker is necessary.  Should your renovation add new features to your home, it’s time to review with your broker.  Finally, if you are embarking on a project that requires you to move out of your home then it is important to discuss that with a broker not only because of the change to the home but the possibility that you need a different type of policy altogether such as a course of construction policy. 

With a home being the biggest and most important asset that many people own, they tend to care for it and invest in it over time.  Renovations are the main source of investment and they will likely affect the insurance coverage on the home, particularly the replacement cost of the home.  The broker value proposition is one of expertise when it comes these matters and while a broker should not tell you how to renovate they can tell how best to protect your renovation as it happens and after the job is complete.

11.03.20
Written By: BSI