Insurance coverage during your renovation
Written by Administrator
Wednesday, 06 May 2009 18:37
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The architectural drawings are complete and approved - you are ready to start your home renovation.

There are two ways to approach the construction process, and the insurance requirements vary with each:

  • A general contractor is hired and has responsibility for the construction from start to finish, including hiring of sub-contractors as required. In this case, part of the required insurance will be provided by the renovator and part by the homeowner.

  • You, as the homeowner act as the general contractor, hiring all the sub-contractors to complete the job which is controlled by you. In this case, all insurance coverages are your responsibility.

Be clear of the responsibilities of yourself and the contractor. The written renovation contract must clearly outline who is responsible for insuring the actual renovation being performed. Don't wait until the renovation is 95% completed and a fire strikes, completely destroying the work just performed, before discussing insurance coverage with your renovator.

Normally with a renovation, as it usually is an extension or improvement of your home, your homeowners insurance company should be notified of your renovation and they will increase your building limits to include the completed value of the work to be performed.

It must be determined prior to construction who has title to construction material prior to installation. Who owns the construction materials? Who bought the materials? Discuss this aspect with your insurance agent. Your homeowners policy will usually insure the materials on the job site, prior to becoming part of the house if the homeowner has title to the materials. An example would be if the homeowner buys the windows directly. The windows are delivered to your home to be installed the next day and are stolen during the night. This loss is usually covered by the homeowner's policy only if the homeowner bought the windows.

If the material is purchased by the contractor in his name, he must protect himself by means of an Installation floater, which will cover the materials on the site and also being transported to the project.

Liability insurance by your contractor is a mandatory requirement. The renovation contractor and any sub-contractors must carry Commercial General Liability including Completed Operations, and Contractors Protective. Liability covers legal liability for bodily injury and property damage caused by the contractor and/or any sub-contractor he hires. A minimum limit of liability recommended is 2 million dollars.

A Certificate of Insurance should be obtained from the contractor by the homeowner. This certificate is proof of the insurance carried by the contractor which is obtained from his insurance broker. The certificate will outline:

  • the renovator's insurance company

  • his insurance broker

  • the limits and extensions of coverage - both liability and installation floater

  • the expiration date of his policy

  • the policy number

This Certificate will be signed by either the insurance broker or insurance company.

For added security, have your insurance broker review the renovator's insurance certificate to be sure it is in order. This review will also help determine what insurance you will not need as part of your homeowners policy - no need for you and your renovator to duplicate insurance coverage.

Lynda Smith is Vice-President, Commercial Lines, at Mainway Insurance Brokers.
 
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