Renovating a home is a big investment both financially and emotionally. However, it is critical that homeowners do not forget about the potential insurance aspect of home renovations, and speak to their broker before any construction work to ensure that their policy will cover any unforeseen events.
“If you embark on renovating your home, it’s important to notify your insurer or broker, as this changes your risk profile during the renovation period. Renovations on your property expose you to the risk of damage or theft to the property,” says Elizabeth Mountjoy, private wealth manager at FNB Insurance Brokers.
“For example, if you are gutting the house or removing the roof, most insurers would request the cancellation of the policy and have it replaced with a contractors all risk (CAR) policy designed for this type of risk.
“It is important to get your broker’s advice on this and see what your current policy will cover you for in the event of a claim during the renovations period. Or more importantly, what you will not be covered for, and obtain the right type of policy for any shortfall in cover.”
The following information will be required to apply for a CAR policy, which will determine the premium a homeowner will be charged for comprehensive cover:
• Full description of contract work
• Insurance period – start and estimated end date
• Estimated contracted value
• Maintenance/defects liability period
• Public liability limit (value)
Tips:
1. Talk to your insurance agent, broker or company representative before you start the project
Let your insurance company know about your remodeling plans. Ask if you will need to update your homeowners insurance and whether you need other types of insurance to protect you financially during the project.
2. Verify that your contractor has insurance coverage
Ask to see a copy of your contractor’s insurance policies. The contractor should have both a commercial business/general liability insurance policy and workers compensation. It is important that the workers remodeling your home be adequately insured so that if a worker is injured he or she does not sue you.
3. Keep records and receipts
Take photographs before, during and after the renovation so that you have a visual record of all of the work done. Keep copies of contracts, receipts for work done and materials purchased.
