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Insurance myths abound, according to a new consumer survey, and that ignorance can have pretty dire consequences for investors and other property buyers who are in the midst of renovating or have already paid the price, so to speak.Here’s a list of the top three of those myths, courtesy of TD Insurance and its online survey conducted by Environics. It’s based on sample size of 2,748 Canadians, polled from February 7 to 18.
Myth #1: “My home will be covered under my original insurance policy during renovations”
Some 56 per cent of respondents incorrectly believed they will always be covered by their original home insurance policy while their home is being renovated, and 24 per cent are unaware that moving out for more than 30 days during renovations requires a policy update.
“Upgrades requiring extensive work, such as adding an extension to your home, may require you to change your entire policy to a building under construction,” says Dave Minor, a vice president at TD Insurance. “And, if you’re not living in your home during renovations, it becomes an easier target for thieves and undetected water damage, which is why your insurer may require you to secure a vacancy permit if you move out for more than a month.”
Myth #2: “If my contractor is injured on my property while working, his insurance will cover it”
Contractors are trained professionals, but accidents can and do happen. However, 41 per cent of respondents incorrectly indicated that if a contractor is hurt on their property while working, they will not be liable.
“If a contractor or their employees are injured on your property, you could be liable for their medical bills, lost wages, or damages for pain and suffering – all out of your own pocket,” says Minor.
He says the property owner should ask to see the contractor’s public liability insurance certificate.
“The amount of insurance coverage they have would depend on the type of renovation, the number of employees and cost of the renovation,” he says. ”The higher the limits of coverage, the more protection you would have.”
Myth #3: “Renovations don’t affect my insurance coverage”
Many survey respondents didn’t know which renovations can decrease your premiums, but are willing to find savings: eight-in-ten homeowners (79 per cent) said they would be likely to make certain upgrades to their home if they could save money on insurance premiums in the longer term.
“Simple renovations like installing security devices, such as alarm systems and deadbolts, or fixing your weathered roof may decrease your premiums,” says Minor.
On the other hand, many homeowners don’t know the types of renovations that can impact their premiums: 22 per cent are unaware that upgrading your electrical system or replacing a weathered roof could lower your premiums, and 53 per cent did not know that installing granite countertops or expensive appliances could increase their premiums.
“Remember, anything that may impact the value of your home or probability of a claim will also affect what and how much insurance coverage you need,” says Minor. “Although water proofing your basement may not be as exciting as new stainless steel kitchen appliances, these types of renovations can help protect your home and belongings.”