Home Renovations & Insurance: What Every Canadian Should Know
As per CIBC (Canadian Imperial Bank of Commerce), nearly 49% of Canadians are engaged in the process of planning, conducting, or had recently completed home improvements in 2024. With inflation driving up material and labour costs, the average cost of a renovation project has nearly doubled to $19,000 compared to $10,000 in 2019.
While upgrading your home can add value and enhance your living space, it also comes with risks, such as potential property damage, contractor disputes, and even insurance gaps that many homeowners overlook. Before you start swinging the hammer, hereโs what you need to know about home renovations and your home insurance policy.
Are you covered for renovations?
Many homeowners assume their existing home insurance policy automatically covers renovations, but thatโs not always the case. Renovations can impact your insurance in several ways:
Coverage Gaps: If your renovation includes structural changes, an addition, or significant upgrades, your policy may not fully cover potential damages.
Increased Rebuilding Costs: Renovations can increase the replacement value of your home, meaning you may need to adjust your coverage to ensure youโre fully protected.
Contractor Liability: If your contractor doesnโt have adequate insurance, you could be held liable for damages or injuries on your property.
Vacancy Permits: If you need to vacate your home for more than 30 days due to renovations, your insurer may require a vacancy permit to maintain coverage. Without one, your policy could be voided.
Key Insurance Considerations Checklist
Renovating your home involves more than just choosing materials and contractors. Here are some critical insurance considerations:
Notify Your Insurance Company - Before starting any renovation, inform your broker and insurance provider about the scope of work. They can advise whether you need additional coverage or if certain risks arenโt covered under your existing policy.
Builderโs Risk Insurance - If your project involves major structural changes, consider builderโs risk insurance. This temporary policy protects against damage to materials, theft, and site-related risks during construction.
Liability Coverage for Contractors - Always verify that whoever youโre working with has contractor liability insurance and workers' compensation coverage. If they donโt, you could be financially responsible for accidents or damages on your property.
Check Your Homeโs Replacement Value - After renovations, your homeโs value may increase. Make sure your policy reflects the updated rebuilding cost to avoid being underinsured.
Consider Additional Coverage for High-Value Upgrades - Luxury finishes, custom-built additions, or specialized installations (e.g., a high-end kitchen) may not be fully covered under your standard policy. You may need to increase your contents insurance or purchase an endorsement for specific items.
5 Risk Management Tips for a Safer Home Renovation
Hire Licensed and Insured Contractors โ Verify credentials, check reviews, and ask for proof of insurance before hiring.
Secure Your Home During Construction โ Install temporary fencing, motion-sensor lighting, and security cameras to protect against theft or vandalism.
Follow Fire Safety Measures โ If your renovation involves electrical work or open flames, keep a fire extinguisher nearby and ensure smoke alarms are functioning.
Store Valuables in a Safe Place โ Move expensive items and documents to a secure location away from the renovation area.
Review and Update Your Insurance Policy โ Talk to your broker before you build for advice on your insurance needs for the renovation, as well as risk management tips for safe renovation. Once renovations are complete, notify your insurer and ensure your policy reflects the new value and risks of your home โ your CBN broker will help you through the process.
Conclusion
Renovating your home is an exciting opportunity to enhance your living space and boost property value, but it also brings new risks that shouldn’t be overlooked. At A-Kan Insurance, we help Canadian homeowners navigate the risks, avoid costly coverage gaps, and ensure their renovations are fully protected from start to finish.
If youโre also thinking of home renovation, let us review your home insurance in Alberta and Ontario to make sure your coverage keeps up with your upgrades.
Contact A-Kan Insurance today for expert advice and a personalized policy review.
