Home Insurance Tips When Remodeling
Your insurance policy is usually not part of the to-do list when it comes to planning a home remodel, and rarely finds its way into the file folder with paint swatches, contractor bids, or hardware store shopping lists. But it pays to start your home improvement project on a solid foundation. Call your team at AA Munro Insurance and let us “hammer out” a protection plan that can bear some weight – from the “before” to the “after”.
Hiring a Contractor?
When hiring a contractor, it is very important that you check their insurance, and how it extends to employees or potential sub-contractors. If they don’t have adequate protection and one of the workers gets injured on the job, you might be held responsible. You should also confirm your contractor’s licensing status with the Nova Scotia Labor & Industries Department.
There are three major parts of a contractor’s insurance policy:
- Worker’s Comp: Applies when an employee or sub-contractor gets injured on the job site. Worker’s Comp covers medical/rehabilitation expenses and lost wages for the worker. If the contractor’s limits are not adequate, an injured worker may sue you. On a side note: If you assume the role of being your own General Contractor, you may have to purchase Worker’s Comp Insurance before you hire sub-contractors. Contact the Nova Scotia State Department of Labor and Industries for more information.
- General Liability: Covers negligence on the contractor’s part which causes injury or property damage to others.
- Builder’s Risk: Covers damage to your home and materials, including materials that haven’t been installed yet.
Are You Your Own General Contractor?
If you function as the general contractor and hire sub-contractors to work in or on your home, you may be held responsible in case of an accident or an injury to a worker or to a third party.
Your homeowner’s policy may provide some liability coverage, but even if so, it may not be enough to cover your assets if you are sued for liability and medical costs. Worker’s comp is not always required by law but if you are in the situation of hiring sub-contractors to work in or on your home and property, you may want to purchase worker’s comp insurance for your own protection.
You might be better off both financially and risk-wise if you hire a licensed and bonded contractor who has the insurance and the experience. It may save you a lot of hassle and worries during an already stressful time.
D-I-Y Project?
If the leftover paint from a low-level DIY project caused a fire in your home, would you be covered by your homeowner’s insurance? Would your D-I-Y project be covered at all?
In this situation, yes. A fire loss that happens suddenly and accidentally, even if caused by negligence, is covered by your homeowner’s policy. Generally, your finished D-I-Y home improvement project would be covered for all the common perils insured on a homeowner’s policy, whether you do the work or a contractor does the work.
After a bathroom remodel, you find a small water leak. You mop it up, only to find it there again the next night. Would defects like this be covered?
Maybe. There are workmanship exclusions on a homeowner’s policy that apply whether the work was done by a contractor or the property owner. If the damage in this example was caused by faulty work, the loss would not be covered by your homeowner’s policy. If you hired a contractor, he would be responsible to fix the damage.
Major Remodel? Insure the “After”
The replacement value of your home may now be significantly greater than it was before, and your homeowner’s policy limits might not be enough to cover your house if you have a total loss. Also, if you have an extended replacement coverage endorsement (very important!) your policy contract requires that you inform your insurance company of any significant change in value. Finally, if you purchased new furniture or electronics, be sure to adjust the personal property limits on your homeowner’s policy.
However, don’t wait until all the work is done. During the construction phase, you may have a significant amount (and dollar value) of supplies stored on your property. If these building materials are stolen or destroyed before your remodel is finished, there may be inadequate coverage.
Remodels Can Save You Money
If you did a major remodel that included updating certain systems like plumbing, heating, electrical, security or your roof, this can often save you money. Give your broker a call to share the news!