When you add an extension to your home, install new
security devices or replace your weathered roof, your insurance policy may also
need a makeover.
A new TD Insurance poll suggests that the majority of
Canadian homeowners don’t disclose home improvements their insurer, even though
it could mean a reduction in your premium. It could also leave you underinsured
or not insured at all if it invalidates your existing policy.
“People buy insurance to have a safety net in case they
ever need to make a claim,” Dave Minor, vice-president of insurance
distribution at TD Insurance, said. “Once you make the claim, you don’t want
any disappointing surprises. So before you pick up a hammer or hire a
contractor, contact your insurance provider.”
The poll released this week suggested 6% of the 2,748
adults checked their policy to ensure their home was covered during the
renovations and just 16% contacted their insurer to see if their existing
policy needed to be revised. Nearly one-quarter of respondents weren’t aware
that electrical upgrades could decrease their premiums while more than half
didn’t know that installing granite countertops could have the opposite effect.
If you’re spending a significant amount of money on
anything that may impact the value of your home, it’s likely the insurer wants
to know about it. So, no, you won’t have to disclose that you’re changing your
wallpaper or replacing your old carpet.
Since the likelihood that a claim will be made increases
during the construction process, the pre-renovation policy often doesn’t insure
some damages relating to it. These losses can include: basement flooding caused
by the contractor breaking a water main, theft or vandalism to the property
that took place while you weren’t living there (vacating the property for more
than 30 days requires a policy update), or a broken glass window resulting from
poorly operated machinery.
Forty-one per cent of homeowners incorrectly believe that
if a contractor is hurt on their property, they will not be liable. But that’s
not true: you could be liable for their medical bills, lost wages or damages
for pain and suffering. That’s why it’s important to ensure that the contractor
provides documentation of their current insurance policy.
“While speaking to your insurer should be on your
pre-renovation to-do list, it’s never too late to make the call, assuming
nothing’s been destroyed and you’re not trying to make a claim,” Mr. Minor
said.
Pete Karageorgos, manager of consumer and industry
relations at the Insurance Bureau of Canada, agrees and says the sooner you
disclose the improvements, the better. Doing so will help you get the right
amount and type of coverage.
“People aren’t aware that in many cases, doing
renovations to their home would require an update to their policy,” Mr.
Karageorgos said. “If the home isn’t insured to value, you may not have enough
coverage and you won’t be completely protected.”
Existing homeowners aren’t the only ones making
home-related blunders: 60% of Canadian homeowners in another poll admitted
they’ve made at least one mistake when they bought a home.
According to the RBC Home Ownership Poll, purchasing a
property that requires significant renovations (15%), not having a bigger down
payment (14%) and skipping a home inspection (13%) are the top three mistakes.
Younger homeowners were more likely than the average
Canadian to list not having a bigger down payment and to not consider future
family and space needs.
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