Home Renovation Insurance in Canada: Your Complete Guide

Home renovations can significantly enhance the value and comfort of your home. However, these projects can also come with costly risks like property damage and theft. That’s why having the right insurance coverage is essential. Let’s dive into the ins and outs of renovation insurance, so you can protect your investment and ensure peace of mind.

What is home renovation insurance?

Home renovation insurance, often referred to as builder’s risk insurance or course of construction insurance in Canada, is a type of home insurance that covers buildings while they’re under construction or renovation. This insurance is essential for protecting against unexpected events that could damage your property or lead to major financial setbacks during the renovation.

What does house renovation insurance cover?

House renovation insurance provides comprehensive protection to ensure that both the homeowner and the renovation project are safeguarded from various risks. Renovation insurance typically includes: 

• Property coverage: This covers damage or loss to the building and materials used in the renovation. For example, if a storm damages the new roof or if a fire destroys materials stored on-site, property coverage helps cover the costs of repairs or replacements.
• Theft coverage: This protects against theft of materials and tools from the renovation site. If valuable construction equipment or materials are stolen during off-hours, theft coverage compensates for the loss, allowing the project to proceed without financial setbacks.

It's important to note that home renovation insurance generally does not include liability coverage for injuries or accidents that occur on the construction site. Contractors usually need to secure a separate general liability insurance policy to cover such incidents.

When do you need home renovation insurance?

Home renovations that don't involve structural changes, such as budget-friendly redecorating or changing flooring, fall under your regular homeowners policy. Once these renovations are completed, you should notify your broker if any upgrades—like solid wood cabinets, marble countertops, coffered ceilings, or high-end flooring—increase the rebuild value. The broker should then update your policy to reflect the increased value of your home.

If indoor or outdoor renovations include structural changes, such as adding an addition, building out a basement, or lifting the house, the home needs to be transferred to a home renovation (builder’s risk) policy. Full gut renovations, such as taking down walls and interior room movements, also require home renovation insurance. 

Variances in coverage requirements across provinces 

Home renovation insurance requirements can vary significantly across Canadian provinces, influenced by provincial regulations, regional risks, and common practices. Here are some key differences that may impact your coverage needs:

• British Columbia: Earthquake coverage is commonly excluded from standard home renovation insurance policies. Homeowners need to obtain an add-on or a separate policy for earthquake coverage due to the high seismic risk in the region.
• Ontario: Severe weather conditions like ice storms, heavy snowfall, and summer thunderstorms can significantly impact insurance needs. Water damage often requires additional policies for adequate coverage.
• Prairie provinces (Alberta, Saskatchewan, and Manitoba): These areas often face severe weather conditions, including hailstorms, heavy snowfall, and wildfires. Renovation insurance policies here might need to include additional protection against weather-related damages​.
• Atlantic provinces: Provinces like Nova Scotia, New Brunswick, and Prince Edward Island are susceptible to coastal weather risks, such as hurricanes and flooding. Homeowners undertaking renovations in these regions may need to enhance their policies to cover these specific risks​. 

How to choose the right insurance policy  

Before beginning any renovation project, it's essential to ensure you have the right insurance coverage in place. Here are key steps and tips to help you navigate the process:

1. Discuss your plans with your insurance provider: Clearly outline the scope of work and timelines with your broker. This helps determine if you’re covered under your home insurance policy or if additional home renovation (builder’s risk) coverage is required. Larger projects might require more extensive coverage adjustments.
2. Ask your insurance provider key questions: Prepare a list of questions for your broker, such as:

• What specific risks does this policy cover during renovations?
• Are there any additional coverages I should consider?
• How will my premiums change during and after the renovation?

3. Understand policy exclusions and limitations: Make sure you’re aware of any exclusions or limitations in your policy. Understanding what’s not covered is crucial to avoid surprises in case of a claim.

Common mistakes to avoid when insuring your renovation project

When planning a home renovation, avoiding these common mistakes and understanding the role of contractors in your insurance coverage is essential. Here are some key pitfalls to watch out for:

1. Not securing a builder's risk policy upfront: It’s crucial to have builder’s risk insurance in place before the project begins, based on the final projected value of your home post-renovation. This ensures your property and materials are protected throughout the entire duration of the project.
2. Underestimating the value of renovation materials and work: Ensure you accurately estimate the value of materials and labour to avoid being underinsured. Failing to account for the full cost can leave you financially vulnerable if something goes wrong.
3. Not considering the contractor’s insurance coverage: Before hiring a contractor, verify that they have sufficient insurance coverage, including general liability insurance and workers' compensation insurance for their employees. This protects you from being liable for any accidents or injuries that occur during the renovation. Understand the extent of the contractor’s coverage and how it interacts with your own insurance. This helps ensure there are no gaps in coverage that could leave you exposed.

Protect your home sweet home

Be sure to regularly review and update your insurance policies to ensure that your coverage accurately reflects the changes and improvements made to your home. This proactive approach helps you avoid any gaps in coverage and provides peace of mind throughout the renovation process. 

Let’s make sure your biggest investment is protected. 

Learn more about home insurance or find the best insurance rates by starting a quote.