Home Renovations and Insurance
Major renovations can change how a property is occupied, what it is worth to rebuild and which risks exist during construction. Insurance Bureau of Canada recommends contacting the insurer before work begins.
Standard home policies are designed for occupied properties
IBC says homeowners planning renovations or construction should notify their insurer because policy terms may change and additional coverage such as builder's risk may be required during the project.
IBC — Building or Renovating? Make Sure You're Properly Covered →What is builder's risk insurance?
IBC describes builder's risk, also called course-of-construction insurance, as coverage designed for a property while it is being built or renovated. The homeowner may arrange it directly, or a contractor may arrange coverage and include the cost in the project price.
The contract, project size and risk profile matter. Do not assume a contractor's policy automatically protects the homeowner's full interest in the building or project materials.
Faulty workmanship and resulting damage are different questions
IBC notes that the cost of repairing faulty workmanship itself is typically excluded from builder's risk coverage, although resulting damage to insured property may be treated differently depending on the policy wording.
That distinction is important: construction insurance is not a warranty for poor work. Review exclusions and the contractor's own liability coverage separately.
IBC — Builder's risk exclusions →Update the home policy after the project
Renovations can change square footage, finishes, plumbing, electrical systems, roofing, heating and other features used to estimate replacement cost. IBC recommends evaluating coverage regularly so the policy reflects recent renovations and upgrades.
A kitchen renovation, finished basement or major addition can therefore affect the amount needed to rebuild even if the real-estate market value moves differently.
IBC — Review coverage after renovations →