Insurance is often the last thing on a homeowner's mind when making renovation plans. Yet, before any work begins, you should make sure that you are well covered during and after the renovation, in case of damage, injury or theft. Then you can proceed with confidence.
The renovator's business insurance
Your renovator should carry commercial general liability insurance, usually with a minimum of $1 million, although they may carry more. This provides coverage in the event of damage to your home or neighbouring properties due to the renovation activity, or bodily injury caused to a third party. Your renovator's insurance protects you - without it you could be liable for damages or injuries.
Ask the renovator for proof of liability insurance - a copy of the policy or a certificate of insurance. Take note of the limit and extension of coverage and the date the policy expires. Ask your insurance representative to review it to ensure that between the renovator's insurance and your own policy, you are well covered. In addition, you should ask the renovator for proof of workers' compensation for employees of the company.
Your own homeowner's policy
Typically, a homeowner's insurance plan is based on "regular usage of the home". However, renovation is an "extraordinary" event that may fall outside your present agreement. That's why it is important to inform your insurance company about the proposed renovation and clarify how it might affect your coverage.
Generally, a homeowner's policy allows for repairs and renovations without jeopardizing coverage. However, there are specific items you should discuss with your insurance representative.
- What's the full value of the work to be done? If you plan a major renovation, it may increase the value of your home beyond your present coverage. You need to increase your insurance before work is completed.
- Whose insurance covers the theft of building materials and products from your property, such as windows, cabinets or bathroom fixtures? (The best preventive measure is to ensure that items are firmly installed by day's end or securely locked away for the night.)
- Will the insurance company need a copy of any municipal permits, approvals or inspection reports for your renovation work?
- Tell your insurance representative if you plan to vacate your home at any point during the renovation. Your insurance company may suggest you make arrangements for someone to check your home regularly to ensure continuous coverage.
- Let your insurance company know if you plan to do some of your own work, or if you are thinking about acting as your own general contractor and hiring others to do the work for you. Many homeowner policies have a standard exclusion related to professional liability, and you may not be covered if someone gets injured on your project. You may have to arrange for additional coverage for your renovation.
- Make sure you also understand what is not covered. Insurance is not a warranty for the work being done on your home, and it does not protect you against shoddy workmanship. However, a written contract and the renovator's commitment to customer satisfaction will. According to insurance companies, hiring a professional renovator with a solid reputation is the most important thing you can do to ensure a successful, problem-free renovation.