Will Renovations Affect my Home Insurance?

Whether you've been staring at old linoleum flooring, stuffed closets, or just dreaming of installing a backyard hot tub, upgrades to our homes are always top-of-mind. 

But before you make any home improvements, there are a few things you’ll need to take care of. Namely, planning your reno, deciding on a budget, and making sure you’re insured. Check out our home renovation guide to make sure you've covered all your bases. 

Consider the scope of your renovation

• Lifestyle renovations to help meet your family's changing needs (like adding new bedrooms, an accessibility ramp, etc.)
• Retrofit projects to update core components of the home, such as mechanical updates or exterior upgrades
• Maintenance upgrades required to repair or improve your home

Typically, retrofit or maintenance will preserve or add value to your home, while lifestyle improvements may vary. Extensive kitchen and bathroom renovations may increase home prices, while smaller improvements like painting a bedroom, may not. 

Finally, include a discussion about contractors when reviewing the scope of the updates. While it may be tempting to do the work on your own, contractors offer expertise and insurance. Opt for tradespeople that provide contracts and detailed invoicing — all protective in case something goes wrong.

Get a permit (if you need one)

Renovations may require approvals, depending on the size and scope of the project. Permits are typically required if you are:

• Adding a new structure to the land (including seasonal buildings)
• Doing renovations or repairs to your existing building
• Updating the use of the building (like changing from commercial to residential usage)
• Changing the foundation
• Making changes to an on-site sewage system

If you're not clear whether your project requires a permit, experts recommend checking with your municipality. No matter which jurisdiction you obtain a permit from, doing so before you start your project is essential. If your project requires removing or levelling structures before renovations can start, it requires an additional demolition permit.

What if I don’t get a permit for my home renovation?

Once you've got your permit, it must be displayed in the home's front window. Failure to do so may find homeowners guilty of an offence under Ontario's Building Code Act, 1992. First-time offenders may be fined up to $50,000 and up to $100,000 for subsequent violations.

Do I need a permit to renovate my condo?

If you're considering renovating a condo, there may be additional considerations before you start work. Whether or not your updates require a building permit, you may need approval from the condo board. Applications allow the board to review elements such as building materials or the impact of updates on common areas. The board may also have rules about when you can have work done and guidelines to manage the flow of contractors and materials throughout the building.

Insurance implications

Renovations may have cost implications long after the dust has settled; updates may impact your monthly insurance premiums. Certain additions like a pool, home office, unique design features, or kitchen and bathroom upgrades may result in a higher insurance premium.

In contrast, renovations that improve your home’s safety like a new roof, updated plumbing and wiring, a new air conditioner or furnace, or a home security system may reduce your home insurance rate. Some renovations or additions may also benefit from having extra or separate coverage — talk to your provider to customize your coverage to better suit you and your family. For instance, Onlia offers policyholders freedom with their coverage — they can access, customize, and manage their coverage online, anytime.

Home improvements that may increase insurance costs 

Kitchen and bathroom renovations: These projects account for around 80% of home renovations and are examples of great ways to drastically increase your home’s value. Before beginning renovations, make sure to talk to your insurance provider for more details on how this can affect your policy. 

Home-based business: Turning your bedroom, basement, or garage into a workspace or home business may require you to get home-based business insurance separate from your standard home coverage. 

Hot tubs and pools: These installations are typically considered liabilities. Your insurance provider may recommend increasing liability coverage for these projects. 

Additions: When adding to your home means adding square footage, it may bump up your monthly cost due to increased replacement value.  

Home improvements that may decrease insurance costs 

Roofs: New roofs can decrease premiums by helping better protect your home from lightning or major leaking from storms or severe rainfall.  

Windows: Much like installing new roofs, upgraded windows can help prevent and reduce the likelihood of damage from lightning, severe rainfall or windstorms.  

Plumbing and wiring: A better foundation reduces the risk of damage. For example, old plumbing pipes are made of cast iron which is susceptible to rusting. Making sure your home is up to regulation will also help you save on your monthly costs. 

Air conditioning or furnace: Upgrading your heating or cooling system can make your home less prone to fires or flooding. Additionally, new units are more energy efficient which further reduces your costs.  

Alarm and security video systems: Installing security measures may reduce your monthly insurance premium — especially those that offer discounts for monitored alarm systems. Any renovation that increases the security of your home may decrease your rate. Projects include adding alarm systems, video surveillance systems or motion sensor lights. 

Why should you let your insurance provider know?

It pays to include your insurance provider in your plans, as your renovations may increase your home's value, thereby increasing the replacement value listed on your insurance. Even if you choose to do-it-yourself, it is beneficial to contact your provider to make sure you remain insured and updated on what your policy covers. Home insurance may cover renovations, but it’s a good idea to review the specifics of your plan before you start.  

Renovations may reveal other issues with the home that were hidden until you started work, such as mould or faulty/outdated wiring — the dreaded knob and tube wiring. Uncovering such unexpected issues may change the insurability of your home.

Your home insurance may offer personal liability insurance, offering coverage if anyone is injured during renovations. However, when hiring tradespeople, always ensure that they have the appropriate coverage through the Workplace Safety and Insurance Board or have their own commercial general liability insurance coverage, which protects their business from third-party injury and property damage claims.

Extensive renovations and updates may require your home to be unoccupied for some time, which is vital to share with your insurance provider. Typically, home insurance dictates how long you can be away while still maintaining your coverage. If a renovation is longer than that period, you may need to request a vacancy permit from your provider, which will maintain coverage despite your absence.

Considerations for condos

If you're renovating your condo, it’s important to understand your insurance and double-check with the board if additional coverages are required for renovations, relevant in instances where common areas are impacted, or various trades are working on site. 

Home renovations are not for the faint of heart, requiring careful planning and quite a bit of work to start the project. However, with a little preparation and a detailed home renovation checklist, your upgrades stand to increase your investment while also making home-sweet-home that much sweeter.

Do you need to tell your insurance provider about building work? 

It’s best to keep your insurance provider in the loop as renovations occur – especially if construction may affect the structure and foundation of your home and consequently affect your premium. 

Does homeowners insurance cover contractors? 

Your homeowner’s policy does not cover uninsured contractors. It is important to check with both your insurance provider and contractor to talk about your coverage in case of incidents that occur on the job.

What’s the best time of year to do home renovation?

Although renovating in the spring and summer seasons may seem ideal, there is an influx of homeowners wanting to do the same – you may have to wait a while longer. Instead, you may opt to do home renovations in the fall when the weather is still pleasant and wait times are less. Call your contractor well ahead of your construction start date for a better idea of when works best for your project.