Canadian Underwriter

Mythbusters: 3 home renovations misconceptions


April 29, 2013  


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Many Canadians who decide to renovate their homes this spring will forget an important step: they won’t consider the insurance implications of their renovations.

According to research from TD Insurance, the majority of homeowners did ensure they had proper coverage during their latest renovation.

In Ontario, just 6% looked into their policy before renovating and only 14% asked their insurer if their policy needed an update following their upgrades.

Read: Ten steps to protect your home against water damage

Only 6% of B.C. homeowners and 5% of Albertans checked their policy before renovations. Furthermore, just 17% of British Columbians and 13% of Albertans asked their insurer if their policy needed updating after renovating.

“Whether you’re installing water-efficient plumbing or simply new cabinetry, before you pick up a hammer or drill, it’s important to understand and learn more about the insurance implications of upgrading your home,” said Dave Minor, a vice-president at TD Insurance, in a press release. “For example, while being handy around the home is convenient for upgrades such as painting or installing crown molding, more challenging projects like tackling the electrical work yourself could actually invalidate your insurance policy. Speaking with your insurance provider can be a quick way to help clarify the unknown.”

Read: 5 tips to safeguard your home from fire

Three Common Reno Myths:

1) “My home will be covered under my original insurance policy during renovations”

48% of Ontario homeowners incorrectly believe they will always be covered by their original home insurance policy while their home is being renovated, and 27% are unaware that moving out for more than 30 days during renovations requires a policy update.

“Upgrades requiring extensive work, such as adding an extension to your home, may require you to change your entire policy to a building under construction,” said Minor. “And, if you’re not living in your home during renovations, it becomes an easier target for thieves and undetected water damage, which is why your insurer may require you to secure a vacancy permit if you move out for more than a month.”

Read: Restoration Revealed

2) “If my contractor is injured on my property while working, his insurance will cover it”

Contractors are trained professionals, but accidents can and do happen. However, 39% of Alberta homeowners incorrectly believe that if a contractor is hurt on their property while working, they will not be liable.

“If a contractor or their employees are injured on your property, you could be liable for their medical bills, lost wages, or damages for pain and suffering – all out of your own pocket,” said Minor. “When choosing a builder, ask to see their public liability insurance certificate. The amount of insurance coverage they have would depend on the type of renovation, the number of employees and cost of the renovation. The higher the limits of coverage, the more protection you would have.”

3): “Renovations don’t affect my insurance coverage”

Many B.C. homeowners don’t know which renovations can decrease their premiums, but are willing to find savings: 78% said they would be likely to make certain upgrades to their home if they could save money on insurance premiums in the longer term.

Read: Rain barrels can help reduce home water damage

“Simple renovations like installing security devices, such as alarm systems and deadbolts, or fixing your weathered roof may decrease your premiums,” said Minor.

On the other hand, many B.C. homeowners don’t know the types of renovations that can impact their premiums: 20% are unaware that upgrading their electrical system or replacing a weathered roof could lower their premiums, and 54% did not know that installing granite countertops or expensive appliances could increase their premiums.

“Anything that may impact the value of your home or probability of a claim will also affect what and how much insurance coverage you need,” said Minor. “Although water proofing your basement may not be as exciting as new stainless steel kitchen appliances, these types of renovations can help protect your home and belongings. It’s always a good idea to talk to your insurance provider to understand more about your coverage.”

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This story was originally published by Canadian Insurance Top Broker.