Insuring Your Remodel: What You Need To Know

Renovating your house? Don't forget to insure it! Home renovation insurance, also known as dwelling under renovation insurance, builder's risk insurance, or home improvement insurance, is an important step in the renovation process. It provides coverage above your standard homeowners insurance policy, protecting your home during and after renovations or remodelling projects. The cost of renovation insurance varies depending on the scope of your project and your existing policy, so it's crucial to consult with your insurance company to ensure you have the right coverage.

Vacant home insurance

The cost of vacant home insurance is typically higher than that of a standard insurance policy for an occupied home. The average cost is about 50-60% more. The cost can also vary depending on the insurance company, the specific policy, and the home's risk profile. Some companies may offer shorter-term policies if the home is not expected to be vacant for a full year.

When purchasing vacant home insurance, it is important to determine whether the property truly qualifies as vacant, as this can vary by insurance provider. Some providers may require a completely separate policy for vacant homes, while others may allow you to add coverage to an existing policy. It is also important to review the specific protections offered by the insurance company, as coverage can vary.

In summary, vacant home insurance is essential for protecting vacant properties from financial loss due to unexpected damage. It covers many of the same things as standard homeowners insurance but is designed specifically for vacant properties, which often face higher risks and vulnerabilities.

Renovation insurance

Before starting a renovation, carefully review your homeowners policy to see what is covered. Most home insurance policies offer some protection if your home is damaged during a renovation, but it is important to talk with your insurance agent to make sure you have adequate protection in place. If you are planning to hire a contractor, confirm that they carry the necessary insurance coverage, including personal liability, workers' compensation, and property damage coverage. If your renovation is a DIY job, you will also want to make sure your liability coverage is sufficient.

• Increasing the amount of insurance coverage needed to rebuild your home: If your renovation increases the cost of rebuilding your home, you may need to increase your dwelling coverage.
• Increasing liability coverage: If someone who doesn't live with you is injured while helping with the renovation, your liability coverage can help protect you. This is especially important for DIY jobs, as contractors should have their own insurance. You may also want to increase liability coverage if your renovation includes an "attractive nuisance", such as a swimming pool or hot tub.
• Boosting personal property coverage: If you are adding new valuable items, such as electronics or expensive furniture, you may need to increase your personal property coverage to protect these items.
• Adding dwelling under renovation coverage: This type of coverage protects building materials at or en route to your property and also covers foundation collapse.
• Vacant home insurance: If you plan to live elsewhere during renovations, note that standard homeowners insurance may not cover property damage or accidents that occur while the home is unoccupied. Vacant home insurance can provide coverage in such cases.

Contractor insurance

When hiring a contractor to remodel your home, it is important to ensure they have the right type of insurance. Here are some types of insurance that contractors should have:

• Liability insurance – This covers basic third-party risks, such as a customer tripping over home improvement materials or advertising injuries and personal injuries. It also covers the business in the event of damage to a rented property.
• Property damage coverage – This is important in case the contractor or their employees damage the customer's property.
• Workers' compensation insurance – This covers employees in case of injuries or illnesses on the job. It also protects sole proprietors from work injury costs that health insurance might deny.
• Commercial auto insurance – This covers accidents involving a business vehicle.
• Contractor's tools and equipment insurance – This covers the repair or replacement of a contractor's tools and equipment.
• Professional liability insurance – This covers legal costs related to a contractor's work performance, such as failure to meet a deadline or remodelling errors.

The cost of contractor insurance varies depending on factors such as the size of the business, the location, the types of coverage purchased, and the policy limits and deductibles. It is important for homeowners to review the contractor's insurance policy to ensure they are adequately protected.

Home insurance discounts

Home insurance can be expensive, but there are a variety of ways to qualify for discounts and save money on your premium. Discounts can be grouped into three categories: customer-related discounts, policy-related discounts, and home-related discounts. Here are some ways to save on your home insurance:

Customer-related discounts

• Retiree or senior citizen discount: Some insurance companies offer discounts to retirees and seniors over a certain age.
• Occupation-based discount: Certain professions, such as teachers and firefighters, may be eligible for discounts.
• Military discount: Active-duty or retired military personnel may qualify for a discount.

Policy-related discounts

• Multipolicy or bundling discount: One of the most common discounts. You can save up to 25% on premiums by purchasing multiple policies, such as home and auto insurance, from the same company.
• Claims-free discount: If you haven't filed a claim in several years (usually 3-5 years), you may be eligible for a discount.
• Loyalty discount: Some insurers provide discounts to customers who have been with them for a certain number of years.
• Payment method discount: Discounts may be available if you set up automatic payments or pay the premium annually.
• Paperless statements discount: Choosing to receive statements electronically can result in a discount.
• Advance quote discount: Getting a quote several days before purchasing a policy may earn you a discount.

Home-related discounts

• Security systems discount: Homes with security features like burglar alarms or monitored security systems may be eligible for a discount due to reduced risk of theft and burglary.
• Home safety features discount: Installing deadbolt locks, reinforced windows, and sturdy roofing can lower insurance costs.
• Smart-home discount: Installing smart home devices like video doorbells and window sensors can reduce premiums.
• Fire safety discount: Homes with fire-resistant materials, sprinklers, and fire extinguishers may qualify for discounts due to reduced risk of fire damage.
• New or renovated home discount: Newer homes or recently renovated homes with updated systems are considered less risky to insure and may be eligible for a discount.
• Green home discount: Environmentally friendly upgrades, such as LEED-certified homes and Energy Star-rated appliances, may qualify for a discount.
• Nonsmoker discount: Nonsmoking households have a lower risk of fire-related incidents, so insurers may offer discounts.
• Location-based discount: Living in a safe neighbourhood or gated community can lead to discounts.

Additionally, you can increase your deductible, maintain good credit, and avoid making small claims to further reduce your home insurance costs. It's also important to review your coverage regularly and compare quotes from multiple insurers to ensure you're getting the best rates and taking advantage of all available discounts.

Builder's risk insurance

Builders Risk Insurance

Builders risk insurance, also known as course of construction insurance, is a type of property insurance that helps protect buildings under construction or renovation. It covers property and construction materials on construction sites when they are damaged or destroyed by fire, wind, vandalism, vehicle collisions or other accidents.

Who Needs Builders Risk Insurance?

Anyone with a financial interest in a property that is being built or renovated should have builders risk insurance. This includes:

• Architects or engineers involved with the project
• Contractors or subcontractors
• Homeowners or property owners

Builders risk insurance policies can vary depending on the provider. Some common coverages include:

• Materials in transit
• Temporary structures, such as scaffolding or signs
• Soft costs, such as additional interest on loans, architect fees, penalties owed to the local government, and additional real estate taxes
• Cleanup costs like debris removal and pollutant cleanup
• Recertification fees for buildings that had previously received green energy certifications

Exclusions

It is important to note that builders risk insurance does not cover all types of damage. Common exclusions include:

• Damage from earthquakes, floods, and wind or beach zones (although extensions may be available for these risks)
• Acts of terrorism and war
• Mechanical breakdowns
• Damage due to faulty design or workmanship

Cost of Builders Risk Insurance

The cost of builders risk insurance typically accounts for 1% to 5% of a business's total construction budget and depends on various factors, including:

• The cost, location, timeline, and square footage of the project
• The expertise and experience of the contractors and subcontractors
• The quality of materials used in the construction
• The logistics of the project, such as where construction materials are stored

Frequently asked questions