# Insights

A Home Insurance Primer for Renovations and Maintenance

Home maintenance is a great way to avoid the rising costs of watching a small problem become worse. Keeping your home insurance provider in the loop could save you money, and ensure the money spent on a renovation doesn’t go to waste.

Regular home maintenance, handled by professionals, is a great way to avoid the rising costs of watching a small problem becomes exponentially worse. Proving to your home insurance provider you have a maintenance plan in place could even save you money, but not keeping them informed could put your beautiful upgrades at risk. Here is a primer on how to navigate home insurance for repairs and maintenance.

Speak with your insurance provider

The first thing to check is if your home insurance provider offers coverage during a renovation. Big or small, some insurers do not protect your home while it’s undergoing a renovation.

If your insurer does not protect your house during renovations, it’s time to shop around for home insurance quotes and find a provider that does. When comparing home insurance policies - look specifically at how they structure the wording around renovations. Look at how they cover you and exclusions where they won’t. If you need to be away for 30 days, you may need a vacancy permit or unoccupied allowance or at least an amendment to your policy.

But not all renovations require any changes to your policy - changing a kitchen backsplash or replacing a fence, should be fine as there isn’t much of an increased risk. If you plan on adding a 3rd floor to your house, well, that’s another story. Regardless of what you think, contact your home insurance provider because they will be able to tell you how your renovation - small or big - might affect your policy.

If you're waterproofing your home, you're reducing the risk of a flood which makes your insurance company happy and you could see a reduction in your monthly premiums. Conversely, if you have professionals maintaining your chimney, not having the right insurance in place could cost you money due to the increased risk.

Check on your contractor’s insurance

Your home insurance policy protects you against risks of fire, flooding from a burst pipe, and if someone injures themselves on your property. Both you and your provider are working to limit the need for an insurance claim. If you’re having work done on your roof, let your insurance company know and check to see if the contractor’s liability insurance is suitable.

You want to make sure if one of their workers is hurt or injured on site, they have provincial worker’s compensation that protects their workers. If not, the injury could end up falling on your third-party liability insurance. If you didn’t inform your insurer the work was being done, there’s a chance they may not cover you since they weren’t made aware of the new and increased risk.

Your contractor should also have private insurance protecting their craftsmanship, their tools, and liability to their crew - over and above the worker's compensation. If your house burns down in a fire related to the work being done (e.g. electrical fault, gas line improperly connected), you need to know your home can be replaced to its current value.

The good news is that with Setter, you can rest assured knowing your home is in safe hands. All of Setter’s carpentry, HVAC, plumbing, cleaning, electrical, roofing, masonry and painting Pros are licensed and fully-insured up to $2-million. This means that if anything were to happen on the job, you are covered.

Know the value of your home

Your house insurance covers your home and its contents in the event of a loss, but if your renovations lead to an increase in the replacement value of your home, so too will the cost to insure it.

If you’ve ever played around with a mortgage payment calculator to see how big of a renovation you can afford when you refinance, know that there’s a similar impact on your insurance. If your home, after renovations, is now worth $100,000 more in raw materials, then you now need to insure your house for that much extra which will lead to an increase in premiums.

If you don’t, and your now $600,000 home burns to the ground and is still valued at $500,000, then your insurance company will only give you $500,000 - you’ll likely not get the value for that 3rd story addition back.

On a smaller scale, the same rules apply to a condo. Let’s say you bought an older condo in need of some upgrades. If you don’t update your condo insurance to reflect the new hardwood floors, granite countertop or stainless steel appliances, then your condo insurance company will only pay to replace the parquet floor, MDF counters, and an energy eating refrigerator.

The bottom line on home insurance

Home insurance is not a maintenance plan. It’s there to protect you and your dwelling from significant risks. Work with your provider and your maintenance team to ensure you’re protected in every situation.

Tyler Wade is a Content Writer for Ratehub.ca, a Canadian financial comparison website that helps you find the best mortgage, credit card, savings account, or insurance coverage based on your specific needs. We help you get the information you need to pick the right financial products. Our mission? To help Canadians make smarter financial decisions.

Thinking of maintenance or renovations?