Does Homeowners Insurance Cover Renovation Damage?

Renovating your home can be both thrilling and scary. It’s always fun to dream up a new look for your house and then watch it come into focus as the changes become reality. Renovations are often filled with anxiety, changes to the design and unpleasant surprises behind the walls. They can also come with damage that occurs during the renovation process.

A pipe is punctured by a drill, a ladder falls or your brand new hardwood floors are scratched up by the contractor, all of these are possible. 

In any of these situations, the cost to repair the damage can be budget busting but, in most cases, your homeowners insurance will step in to cover these types of bills. Unfortunately, there can be situations where you may be on the hook for the cost of repairs. 

Let’s have a quick look at your renovations and your homeowners insurance and what you should do to make sure you are protected:

Do Your Research Before the Work Starts

The first thing you should do is haul out your policy and read it over. Pay close attention to exclusions that may apply to your renovation work as well as any specific requirements you need to meet in regard to construction, renovations and other situations where your property is changing. 

Pay particularly close attention to the section called “causes of loss” section. This is usually the section that will spell out any exclusions that relate to construction or renovations. If you are unclear about anything, or have questions about potential exclusions, call your agent or insurance company for clarification. 

Notify Your Insurer 

Before you start the work of renovating your home, call your insurer and notify them of the changes you are planning to make. Your agent or insurance company should be able to answer any questions you have regarding coverage as well as advise you on your need to up your coverage levels if necessary. 

If you are completely gutting a kitchen, bathroom or adding a renovations, the cost to rebuild your home will most likely be headed up so you may need to up your coverage levels to cover these additional costs in the event your home is seriously damaged or destroyed. 

If you fail to up your coverage after a renovation to the correct coverage levels, you may find yourself short on coverage if your home is destroyed or seriously damaged. If that is the case, you will have to cover the remaining expenses once your coverage has been exceeded.

What is Covered During the Renovation?

Damage caused by a renovation should be covered by your insurance policy as long as it is caused by a covered peril. Water damage, theft, fire, explosions and even vandalism are covered by a standard policy.

If you contractor ends up causing water damage to your home, starts a fire, drops a ladder or other heavy equipment onto your new countertops, or turns out to be a con artist who robs your home, the damage should be covered. This coverage extends to the outside of your home as well. Most homeowner insurance policies also cover detached structures on your property, so if you need to renovate a barn or outbuilding, you should be protected.

What is Not Covered by Your Insurance

While most accidental accidents are covered, there is no coverage for shoddy work. If you hire a less than stellar contractor, you will have to cover the cost to redo the work. It is possible to go after the contractor’s general liability insurance but if the contractor is bad enough to do lousy work, there is a good chance they are not carrying insurance. 

The main goal of insurance is to help protect against sudden and accidental damage, it does not pay to repair poor work or even damage that is caused by a lack of maintenance. It is your responsibility to maintain your home and if a lack of maintenance leads to a claim, it may be denied. 

While shoddy work is not covered, if your contractor damages your home, your insurance company should cover the damage and then go after the contractors insurance company for repayment. 

Your Neighbors Home is Damaged

If the damage ends up happening to your neighbor’s house,  they will have to take it up with the contractor’s insurance company. As an example, if the contractors ladder falls over the fence and crashes through the neighbor’s picture window, this damage would fall to the contractor’s insurance policy, not yours.

This is why it is always important to check that your contractor is fully licensed, insured and bonded before they start a job. Ask to see their insurance certificate and check the coverage dates to make sure it has not expired. If you have any doubts about the insurance paperwork, call the insurance company directly to verify coverage and coverage levels. 

If you hire an uninsured contractor your neighbor could come after you for the damages. Always verify anyone’s credentials that are working on your property.