Are you one of those thousands of Canadians that saw spending more time at home as a great opportunity to do those home renovations you’ve been putting off? If so, we don’t blame you! What a perfect time to work on that new back deck, add that much-needed third bathroom or finally finish your basement!
Making changes to your home can increase its re-sale value, as well as provide extra value to your family! But, some renovations change the way your home should be insured. Making changes without letting your broker know, can mean that you may not be fully covered if you were to have a claim.
1. Change in square footage or use
Finally! You are able to get that addition put on to make room for your expanding family! Any expansion of your home will require more insurance, because now your house will cost more to rebuild. You may also be purchasing more furniture or additional appliances which, which means that your contents cost more to replace as well.
If your square footage doesn’t change during your renovations, but instead you now have another bedroom, bathroom or kitchen (just to name a few!), we need to let your insurance company know. Adding these spaces means that you have added more square footage, and the new space increases the rebuild cost of your home.
You may have made some changes to your home’s configuration to accommodate a home-run business. While having a business in your home is very convenient, it changes your protection needs. In insurance terms this is a “material change in risk” for your insurance company. What that essentially means, is that your home insurance is intended to protect your home while it is used for recreation purposes, and adding a commercial use is not what the insurance company is insuring you for. We will need to know right away so that we can adjust your insurance appropriately to protect you for things such as a cyber breach, a client hurting themselves or damage to “commercial” property.
2. Updates to furnace, electrical or roofing
We always endorse you updating your electrical, furnace or roofing! Newer systems means increased safety protocols, which means that you are more likely to keep you and your family safe. Especially in older homes where systems could be over 40 years old, upgrading will be a welcomed change to your home.
Based on your upgrades, they may increase your home’s value and rebuild cost, thus increasing your insurance slightly. But what is important here is that your risk of loss from an electrical fire, leak or burst pipe decreases significantly, and your insurance company will recognize that!
3. Added a pool
Adding a pool can mean adding opportunities for your family to bond and make new memories! But it also means that you take on new liability if someone were to be injured (or worse) in your pool. This also means that your insurance company takes on new risk by providing you insurance coverage for your home/property. The liability portion of your home insurance policy protects you from paying legal and medical fees, and being found personally liable for anyone using your pool or visiting your home, in the case someone gets hurt.
Adding a pool also increases the value of your home, which in turn, increases the cost to rebuild your home. Increased rebuild costs = increased insurance rates, since you are charged based on the risk of loss vs. the value of loss.
Ultimately, your insurance policy needs to have the right amount of coverage for your new liability risk, so you will need to make changes with your broker. The partnership with your insurance company goes both ways, and you can help to protect yourself by making sure that your insurance policy protects you, your family and your financial investments!