How remodeling affects your home insurance rates
Everything changes. Years go by and everyone grows and develops as people. Families expand. Your lifestyle is transformed before you know it. Suddenly, the house you bought years ago just isn’t the right fit.
Home projects are a fun part of home ownership if you’re careful. Not only can you make an aging home feel brand new, but you can also add value to your property and make it a more comfortable place to live. However, if you’re doing construction on your home, your home insurance company is going to want to know all about it. And it’s almost guaranteed your home insurance will be affected. Here’s what you want to know about home insurance when you remodel your home.
Remodel vs. renovation
What, exactly, is a remodel? Is it different than a renovation? And does it really matter for your insurance rates? Spoiler alert: yes, these are two different things.
A quick hop over to the Merriam-Webster dictionary tells us that to “renovate” means to “to restore to a former better state (as by cleaning, repairing, or rebuilding)”. Renovations can be subtle things like updating your plumbing.
On the other hand, “remodel” means “to change the structure, shape, or appearance of (something)”. Basically that means a remodeling project could mean a much more in-depth and fundamental change to your home, like adding a bedroom or replacing the floors. Another important distinction is that remodels are not done to “fix” problems. Instead they serve to improve or change the home to suit your needs better.
Tell your insurance company before you begin remodeling
The nature of a remodel might mean a more drastic change than a renovation, and that figures heavily into your home insurance rate in Canada. After you lock down your plans, call your insurer and tell them what’s going on. Depending on the number of people you expect to work on the house, whether or not you need to stay elsewhere, and how long the work is expected to take, your insurance company may change the classification of your policy to a “building under construction”, which means you won’t have as much coverage as before for the contents of your home.
What’s next for your home insurance rate?
The truth is that it will most likely go up. A house under construction is a bigger risk than a house not under construction. Besides, you don’t want to be on the hook if something goes wrong and you don’t have the right amount of coverage. Aside from the chance of “building under construction” classification, here are other reasons a remodel can boost your insurance premium.
- Vacant houses are more likely to be broken into. If your remodel puts you and your family out of the home for an extended period of time, ask your insurer for a vacancy permit so you don’t invalidate your coverage while you’re gone.
- You may be liable for worker injuries. A good contractor has insurance for the workers, but that may not be the case. Protect yourself by making sure you have more than enough liability coverage while the work is underway.
At the end of the day, the most important thing to remember is to keep in contact with your insurance agent or broker.
Update your coverage once the remodeling is complete
Because the value of your home may have increased, you may need to buy more coverage for the structure. Also, you want to reduce the liability coverage to previous levels since you won’t have workers in the house anymore. Let your insurance professional help you assess the coverage you need.