Tell your insurance broker that you’re renovating, here’s why
In not very surprising news, Home and Garden Television (HGTV) ratings increased 22 percent during the onset of the Covid-19 pandemic last March. If you weren’t already addicted to HGTV before the pandemic, you may have become a convert after running out of new Netflix shows to binge-watch. We closed our doors, hunkered down, and let the fixers, the flippers, the hunters, and those renovation-loving twins lead us through an endless parade of open concept floor plans, subway tiles, and shiplap. After seeing our own homes with fresh eyes during this pandemic, making a more liveable and enjoyable space for ourselves and our families landed top of mind. But if you are going to do any renovations, make sure you keep your insurance broker in the loop. Because renovations may affect your insurance premiums and coverages..
The dizzying array of country chic, exposed brink, and farmhouse sinks on television have probably spurred many British Columbians to make renovation plans for the upcoming spring and summer “reno” season. Some may have purchased seasonal properties with cottages to update, or raw land to develop. Ladies and gentlemen, start your nesting engines…and prepare to make your very first home renovation mistake. And it’s kind of a big one, too; you haven’t contacted your insurance broker to update them on your renovation plans.
“They tweeted, Instagrammed, and Facebooked their renovation plans, and even telephoned their great aunt in Kelowna about it. Everyone in the loop knows demolition begins next week. Well, everyone except for me.” – Karyn Mosley, Manager, Personal Lines Reliance Insurance.
Now, most insurance brokers don’t like to toot their own horn. They are a humble group of people and they pride themselves on helping every person that contacts them. However, they are also incredibly astute and extremely knowledgeable when it comes to making sure your home and everything in it are completely covered at all times. So, they get more than a little concerned, when you don’t call them about that new home theatre wing you’re are planning to add to your house this spring.
Don’t overlook insurance coverage for home renovations
A large percentage of homeowners overlook insurance coverage during the planning stages of a renovation. For example, In Ontario, only six percent of homeowners checked into their house insurance policy prior to renovating, and only 14 percent asked if they needed to update their policy after a renovation. Neglecting this one simple step could be costly.
Do you need a building construction policy?
It doesn’t matter how big or small of a renovation, checking in with your insurance broker first will do nothing but good for your project. Even skilled homeowners that intend to do the renovations themselves still need to make that call. Your current home insurance policy may not be enough to cover large projects like a home theatre wing and additional coverage will be needed, or, your insurance policy may have to be changed to a building construction policy depending on the scale of work being done. It’s possible some smaller renovation projects will require no changes to a home insurance policy. You’ll only know for sure once you speak with your insurance broker.
How your home insurance broker can help
Every renovation has its own unique set of challenges, and they may only get bigger and uglier if you don’t consult with your insurance broker prior to renovating. The following situations may not be covered, a claim could be denied, or a policy voided if you haven’t informed your insurance broker prior to renovating.
Even the most skilled tradespeople can get hurt on the job. Liability coverage protects you in the event of accidents occurring on your property.
Unfortunately, a construction site attracts burglars. Your project is more vulnerable due to increased access by all kinds of workers, and easier access should additional temporary entry points be established during the renovation.
We’ve seen this many times on the renovation programs, especially with older dwellings; a mid-renovation discovery that the plumbing is shot or there’s an un-repairable foundation issue. Additional upgrades may be necessary in order to maintain insurance coverage. Tell your insurance broker about EVERYTHING because a) they want to hear about it, and b) they will advise you on what’s required to keep your property protected.
The right way to vacate
Your renovation could be so big, you can’t live in the house during the job. But, home insurance policies are based on you living in the home. Your insurance broker can help you with obtaining a vacancy permit and you won’t break any policy rules.
Increased home value
Chances are good you’ve renovated your home or summer property for the better, and not the worse. This means the value of your home has increased, and your insurance broker will need to adjust your home’s replacement value to reflect the increase. Experts estimate that one out of four remodelling projects adds at least 25 percent to the value of a home, yet often most homeowners forget to increase their coverage to protect their investment. Most homeowners insurance policies require 100 percent of the home’s replacement cost, so it’s important to raise your home’s policy limit before your project begins.
And speaking of making your home better; should you go completely custom with your projects by commissioning custom cabinetry, countertops, high-tech, smart home equipment or a 1000 square foot wine cellar, etc., Reliance Insurance has high-value home insurance agents that specialize in bespoke home insurance policies.
You’re protected, but is your general contractor and sub-trades insured?
You’ve done everything right with your renovation plans, including consulting with your insurance broker first, who made any necessary adjustments to your policy coverage, and now all of your ducks are in a row. How about the general contractor you’re considering? Are they covered, too?
The best way to minimize your renovation risk is to hire a reputable general contractor for the job. As part of the bidding process, ask the general contractor to provide a Certificate of Insurance and/or copies of the policies. Specifically, check for coverage for the following:
· General Liability: Ask if the contractor has liability insurance, which covers losses due to negligence and errors or omission, which results in property damage. Also, ask that you are added as an “additional insured.”
· Builders Risk: This policy is designed to cover damage to your home and materials, including those not installed yet. Reliance Insurance can help you verify whether you should require this from your contractor, based on your renovation project.
Homeowners doing it for themselves
Any homeowner planning to complete their own renovations, Worksafe BC has special information and requirements just for you:
If you are acting as the prime contractor in the construction of your own home you are subject to the health and safety provisions of the Workers Compensation Act and also may be required to register with WorkSafeBC.
Be sure to get a clearance letter for each contractor to make sure they’re in good standing with WorkSafeBC; otherwise, you could be held jointly liable for any unpaid WorkSafeBC insurance premiums if the contractor you hire does not pay their premiums during the period they worked for you.
If you are your own general contractor you assume the risk
If you decide to do it alone and manage a renovation yourself, you assume all the risks. A review of your homeowner’s coverage for liability and property is prudent, as you are assuming more risks and exposures than contemplated by homeowners insurance.
Hiring subcontractors who can provide you with a “Certificate of Insurance” or copies of their policies showing their general liability coverage is mandatory for your legal protection.
If a friend or relative helps out as a favour and gets injured, your homeowner’s insurance typically covers the cost of their injuries, up to your policy limits. For an extra layer of protection, it’s a good idea to also carry umbrella liability coverage, which kicks in to provide liability coverage above your homeowner’s limits.
As mentioned earlier, every renovation project will come with its own set of challenges to manage. At least you’ll have a handle on your insurance coverage when you consult with your insurance broker first.