Brokers are increasingly taking on the role of adviser for their clients, and one area that definitely benefits from professional guidance is home renovations. The first issue to determine is whether or not the client’s proposed changes even fall under the header of renovations, said Nathan Tjandrawinata, AVP, personal insurance at Cansure.
“There is a grey line between renovations and course of construction,” said Tjandrawinata, noting that insurance companies have varying guidelines but most differentiate by the cost of the project.
“It ranges from $50,000, and I have seen $100,000 as the cut off. A good indication would be the scope of the project — cosmetic only, versus structural. More often than not, if it’s cosmetic only, it would fall under renovations.”
Whether it’s a full-on addition or limited changes, it’s critical that the broker is up to date on the plan and ensures the client’s coverage is adequate. Renovations can lead to new elements that add risk, such as a fireplace or a swimming pool, or could change the replacement cost of the home. It’s also not unusual for renovations to actually reduce the risk of future claims and therefore lower rates: for example, upgrading windows, doors or the roof which protects against the risk of weather-related damage.
Whatever the scope of the renovations, it goes without saying that all work should be done “in accordance with city bylaws, and proper permits should be obtained for the project as applicable,” said Tjandrawinata.
“Another consideration is that most insurance companies require plumbing and electrical work to be done by qualified subtrades,” he added.
Ultimately, brokers need to keep in mind that home renovations and updates can vary in exactly how much they change the existing risks that a homeowner’s policy covers. It’s important to get a full picture from the client about the scope of the renovations in order to provide proactive advice as well as comprehensive coverage in the event of a claim.