How Renovations Impact Your Home Insurance
What you need to know for your next home reno project, and how it can affect your home insurance.
Before you make any home improvements, there are a few things you’ll need to take care of. Namely, planning your reno, deciding on a budget, and making sure you’re insured. Check out our home renovation guide to make sure you've covered all your bases.
Consider the scope of your renovation
Before you start to plan your home updates, consider the scope of the work. Renovations can be small or large, with different implications on your home's comfort and value. There are 3 types of common renovations that are classified by the type of home modification they offer:
- Lifestyle renovations to help meet your family's changing needs (like adding new bedrooms)
- Retrofit projects to update core components of the home (such as mechanical updates or exterior upgrades)
- Maintenance upgrades required to repair or improve your home
Typically, retrofit or maintenance will preserve or add value to your home, while lifestyle improvements may vary. Extensive kitchen and bathroom renovations may increase home prices, while smaller improvements like painting a bedroom, may not.
Finally, include a discussion about contractors when reviewing the scope of the updates. While it may be tempting to do the work on your own, contractors offer expertise and insurance. Opt for tradespeople that provide contracts and detailed invoicing – all protective in case something goes awry.
Get a permit (if you need one)
Renovations may require approvals, depending on the size and scope of the project. Permits are typically required if you are:
- Adding a new structure to the land (including seasonal buildings)
- Doing renovations or repairs to your existing building
- Updating the use of the building (like changing from commercial to residential usage)
- Changing the foundation
- Making changes to an on-site sewage system
If you're not clear whether your project requires a permit, experts recommend checking with your municipality. No matter which jurisdiction you obtain a permit from, doing so before you start your project is essential. If your project requires removing or levelling structures before renovations can start, it will also require an additional demolition permit.
What if I don’t get a permit for my home renovation?Once you've got your permit, it must be displayed in the home's front window. Failure to do so may find homeowners guilty of an offence under Ontario's Building Code Act, 1992. First-time offenders may be fined up to $50,000 and up to $100,000 for subsequent violations.
Do I need a permit to renovate my condo?
If you're considering renovating a condo, there may be additional considerations before you start work. Whether or not your updates require a building permit, you may need approval from the condo board. Applications allow the board to review elements such as building materials or the impact of updates on common areas. The board may also have rules about when you can have work done and guidelines to manage the flow of contractors and materials throughout the building.
Insurance implicationsRenovations may have cost implications long after the dust has settled; updates may impact your monthly insurance premiums. Certain additions like a pool, home office, unique design features, or kitchen and bathroom upgrades, may result in a higher insurance premium. In contrast, renovations that improve your home’s safety like a new roof, updated plumbing and wiring, a new air conditioner or furnace, or a home security system may reduce your home insurance rate.
Why should you let your insurance provider know?It pays to include your insurance provider in your plans, as your renovations may increase your home's value, thereby increasing the replacement value listed on your insurance. Home insurance may cover renovations, but it’s a good idea to clearly review the specifics of your plan before you start.
Renovations may reveal other issues with the home that were hidden until you started work, such as mould or faulty wiring. Uncovering such unexpected issues may change the insurability of your home.
Your home insurance may offer personal liability insurance, offering coverage if anyone is injured during renovations. However, when hiring tradespeople, always ensure that they have the appropriate coverage through the Workplace Safety and Insurance Board.
Extensive renovations and updates may require your home to be unoccupied for some time, which is vital to share with your insurance provider. Typically, home insurance dictates how long you can be away while still maintaining your coverage. If a renovation is longer than that period, you may need to request a vacancy permit from your provider, which will maintain coverage despite your absence.
Considerations for condosIf you're renovating your condo, it’s important to double-check with the board if additional coverages are required for renovations, relevant in instances where common areas are impacted, or various trades are working on site.
Home renovations are not for the faint of heart, requiring careful planning and quite a bit of work to start the project. However, with a little preparation and a detailed home renovation checklist, your upgrades stand to increase your investment while also making home sweet home that much sweeter.