How can renovations affect home insurance?

By HUB SmartCoverage Team on March 6th, 2018

Whether you’ve been saving for the dream kitchen or adding an extra bedroom for a new addition to the family, home renovations can be a huge investment. In fact, it’s predicted that Canadians will spend $74 billion on home improvements this year alone.

While you might be prepared with savings to cover the cost of labour, new appliances and materials, one thing you might not be prepared for is a change in the cost of your insurance. Home insurance policies can alter depending on the kind of renovation you embark upon.

Renovations can sometimes increase your insurance premium

In many cases, a renovation can see the cost of your premium rising, by a little or a lot. Your home insurance policy is designed to cover the cost of any damage in the event of an accident. Any work that you do which increases the value of your home will automatically increase how much you pay for the right amount of coverage from your insurer.

A swimming pool

The addition of a swimming pool could see your personal liability coverage increase. In the eyes of an insurer with a new pool comes a new set of opportunities for someone to injure themselves on your property. Furthermore, the insurer may also require you to shell out for a locked fence around the pool, to deter anyone from entering the area.

An extension

Adding an extension to your house could also see a boost in the cost of your insurance. Your policy will have to be adjusted to account for the value of the new space, which could anywhere from $100 per square foot or more to your home.

Many homeowners extend with the hopes of renting out space; while this is a great way of making an additional monthly income, it does mean that your insurance policy would need to be adjusted accordingly. A landlord’s policy would protect you and your tenant, should any unexpected damage occur.

A new kitchen or bathroom

If you’ve decided to splurge on that dream kitchen or bathroom, that too could contribute to your premium jumping up. When your original policy was laid out, it accounted for your old kitchen- think laminate countertops and generic cabinets. So, if you decide to spend a big chunk of money on a custom design kitchen fitted with all the latest interior design magazine “must haves”, then your insurer needs to reassess your policy to cover these additions. Chances are, your premium is going to go up because your home is now worth more.

Renovations can decrease your insurance premium

It’s not all bad news and spending though, as some renovations could actually lower how much you’re pulling out towards your insurance. Any investment that improves the quality, safety or lowers the cost of repairs for your insurer could see you making lovely little savings each month.

New Roof

Investing in a new roof might not be something that you have on the wish list, but it could improve the infrastructure of your house, especially if you live in an old home. On average, an updated roof can cut your premiums between 10% and 20%. An even bigger discount is up for grabs for homeowners living in hurricane, wind or hail prone zones if the new roof has specialist features such as hurricane straps, waterproofing or top rated shingles.

Upgraded pipes and wiring

Whether the new pipes and wiring come as part of a separate renovation job, or you decide to invest in them to upgrade your home, they could see your insurance premium drop. Spending money to install newer electrical and water systems in your home lessens the chance of unexpected breakage, which can save you a real headache further down the line.

Renovations can void your insurance

You might have guessed that some home improvements could affect the amount you pay for insurance, but did you know that they can void your policy altogether? Certain types of alterations could leave you stranded without any kind of coverage, so it is best to check the small print of your policy or chat with your insurer before embarking on anything.

If the level of work you are having done requires you to leave your home for the duration of construction, this could render your insurance policy useless. Most home insurance plans require that the home is occupied for it to be valid. This is because it lowers the chance of potential break-ins or damage going unnoticed. This doesn’t mean that you have to pitch a tent in a construction zone though. Most insurers will grant you a vacancy permit upon request, which may cost you a little more money, but also ensures your home remains covered throughout the duration of the renovations.

In any case, it is vital that you inform your insurance company and are upfront with them about any renovation plans you have. You never know, their response could surprise you with a few extra dollars in your pocket each month.

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