Home insurance and renovations: what to tell your insurer

A renovation changes the house your insurer agreed to cover. It is worth more, it is open to the weather for a while, and there are strangers with saws in it. Most policies expect to hear about that before it happens, not after a claim.

This is planning information, not insurance advice. Every policy wording is different, and the only answer that counts is the one your insurer or broker gives you in writing.

Call before the work starts

Tell your insurer or broker what is being done, when, and roughly what it adds to the value of the home. A finished basement or a new kitchen raises the replacement cost, and a policy limit set for the old house can leave the new one short after a fire. We have not found a national dollar threshold for when to call. Treat any structural, electrical, plumbing, or roofing work, and any job that opens a wall, as a call.

1. Describe the scope and the dates.
2. Ask whether coverage changes while the work is under way.
3. Ask what the new replacement value should be once it is finished.
4. Get the answer by email and keep it with the contract.

Vacant is not the same as unoccupied

If you move out for the work, the word that matters is in your policy. Intact, one of Canada's larger insurers, describes a vacant home as one where the residents have moved out with no plans to return, and says coverage usually stops after 30 days of vacancy unless you buy vacancy coverage. A home you are away from but plan to return to is unoccupied, which is treated differently. Your policy may draw the lines in other places, so read it.

Either way, tell the insurer when occupancy changes. Intact warns that claims can be reduced or denied if you do not.

Condos: your improvements are yours to insure

In a condo, the corporation's policy covers the building, and your unit policy covers what you add. TD Insurance tells owners to contact their insurer before a renovation starts, because the work changes the betterments and improvements coverage they need. TD also warns that coverage may be limited during the work, or not valid if the unit sits vacant too long. Read the condo renovation rules alongside your own policy.

The contractor's insurance is not yours

Your home policy is not meant to pay for a contractor's mistake or a worker's injury. Ask for a certificate of commercial general liability insurance, and check workers' compensation clearance with WSIB in Ontario, WorkSafeBC in British Columbia, or the board in your province. The City of Calgary lists both in what a written renovation contract should include.

Overland flood and sewer backup are separate

The Government of Canada says water damage from a burst pipe is basic coverage on most home policies, but flooding is not. Overland flood, sewer backup, and sump pump failure are usually separate endorsements, and whether you can buy overland flood depends on how your insurer rates your flood risk. Floods account for about half of all home insurance claims in Canada, and the average flooded basement costs over $40,000 to repair.

Finishing a basement is the moment to check which of those endorsements you actually have. New drywall and flooring raise what a backup costs you.

Backwater valves and sump pumps

Ask your insurer whether a backwater valve or a sump with a battery backup changes what they will offer on sewer backup. Then check your city. The City of Toronto's Basement Flooding Protection Subsidy pays up to $6,650 per property toward a backwater valve, a sump pump, a battery backup, and related work, if a City-licensed contractor does it and a backwater valve has its building permit. Other municipalities run their own programs.

If you remember one thing, make the call before the first wall comes down. Finding out what your policy says after the water is on the floor is the expensive way to learn it.