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Many Canadians unaware of a home renovation's impact on insurance policy

Guthrie Insurance

* See Editors note at end

As the days get longer and weather warms, Canadians may be in the beginning stages of renovation projects, but results from a recent survey suggest many homeowners aren't aware of how their upgrades can impact their insurance policies.

According to the results from a TD Insurance survey, only 6% of Canadians checked their home insurance policy to ensure they were covered during upgrades, and only 16% asked their insurer if they needed an update following their last renovation. The online survey of 2,748 Canadians was completed in February by Environics Research.

Albertans were least likely to consult their insurer about upgrades, with only 13% reporting asking if they need a policy update, while 17% of British Columbians asked about it, according to the survey results.

More than half (56%) of homeowners also incorrectly believed they will always be covered by their original policy while their home is being renovated, according to TD. Nearly a quarter (24%) were also unaware that moving out for more than 30 days during renovations requires a policy update, the results suggest.

Respondents were also not always informed of liability issues related to renovation projects, with 41% incorrectly believing they will not be liable if a contractor is hurt on their property while working, TD noted.

And, while 79% of homeowners said they would likely make upgrades that could help them save on premiums in the long term, many weren't aware of what kinds of changes would have an impact, TD said. For example, 53% didn't know that installing granite countertops or expensive appliances could increase their premiums, the company said.

"Upgrades requiring extensive work, such as adding an extension to your home, may require you to change your entire policy to a building under construction," Dave Minor, a vice president at TD Insurance advised consumers in a statement.

"And, if you're not living in your home during renovations, it becomes an easier target for thieves and undetected water damage, which is why your insurer may require you to secure a vacancy permit if you move out for more than a month," he added.

The Insurance Bureau of Canada website also includes information for homeowners about when they may need a policy update.

Source: Canadian Underwriter

*Editors note: Like most things relating to insurance, there is rarely a definitive answer. Minor renovations e.g. painting a room, replacing a fixture, and similar activites have either no or very little bearing on your home insurance. Always best to check.

Major renovations certainly will e.g. if you are going to vacate your home in excess of 30 days special coverage needs to be arranged otherwise ALL of your coverage ceases on the 31st day.

Home liability insurance needs to be carefully reviewed. If injury or property damage occurred or was alleged it is highly likely that the homeowner along with the contractor and sub-trades will be sued. Anyone can be named in an action.

Installing a granite counter top or expensive appliances itself would not increase premiums. However, if any renovations increase the overall replacement value of the building, necessitating a higher building limit, that would obviously increase the premium.

Also, to maintain the "guaranteed replacement cost option" found in many home insurance policies, any increases in building replacement values must be reported to your insurer with the possibility of a re-evaluation and adjustment to your building limit of coverage.

Other areas to consider when renovation include; shutting off water, additional security, hoarding, review of contractors/trades insurance, neighbouring premises, and more.

If this is being contemplated always best to check with your broker for a detailed review of your risks and exposures and addressing them with the appropriate insurance.

Editor - Guthrie Insurance Brokers Ltd

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