Home Renovations and Insurance: What You Must Tell Your Insurer

Renovating your home is exciting. Whether you're finally getting that open-concept kitchen, finishing your basement, or adding a second storey, a renovation is a major investment in your property and your quality of life.

But here's something most Canadian homeowners don't realize: renovating your home without telling your insurer can void your coverage. If something goes wrong during or after construction — a fire, water damage, a contractor injury — and your insurer wasn't informed about the renovation, your claim could be denied entirely.

This isn't a technicality. It happens to Canadian homeowners every year. The good news is that it's completely avoidable. In this guide, we'll walk you through exactly which renovations require notifying your insurer, how renovations affect your insurance premium, and what steps to take before you pick up a hammer.

Not every project requires a call to your insurance company — repainting a bedroom or swapping out light fixtures won't affect your policy. But any renovation that changes the structure, value, or risk profile of your home needs to be reported.

Here are the most common renovations that require notifying your insurer:

• Kitchen remodels: New cabinets, countertops, appliances, and layout changes significantly increase your home's replacement cost.
• Bathroom renovations: Moving or upgrading plumbing, adding heated floors, or installing a new shower system all change the risk and value of your property.
• Roof replacement: A new roof affects both the value and the insurability of your home. Many insurers offer premium discounts for new roofs.
• Basement finishing: Converting an unfinished basement into living space dramatically increases the rebuild cost and may require additional sewer backup coverage.
• Home additions: Adding a room, a second storey, or an in-law suite increases your home's square footage and total replacement value.
• Swimming pool or hot tub installation: Pools and hot tubs introduce significant liability risk and almost always require a policy update plus increased liability limits.
• Electrical upgrades: Replacing a fuse panel with a breaker panel, upgrading to 200-amp service, or rewiring your home changes the fire risk profile.
• Plumbing upgrades: Replacing old galvanized or polybutylene pipes with copper or PEX reduces water damage risk and can affect your premium.
• HVAC system replacement: Installing a new furnace, central air conditioning, or switching fuel types should be reported.
• Deck or patio construction: Outdoor structures that are attached to your home are covered under your dwelling coverage and increase replacement cost.

Rule of thumb: If the renovation requires a building permit, you almost certainly need to notify your insurer. When in doubt, call your insurer — the call costs nothing, but failing to make it could cost you everything.

Your home insurance premium is based largely on the replacement cost of your home — the amount it would cost to rebuild your home from the ground up. When you renovate, that replacement cost changes, and your premium adjusts accordingly.

Here's how the math works:

• Increased replacement cost = higher premium. A $50,000 kitchen renovation doesn't add $50,000 to your premium, but it does increase your home's total replacement value, which raises your monthly cost. Typically, a major renovation increases premiums by 5–15%.
• Increased liability = higher premium. Adding a pool, trampoline, or detached structure increases your liability exposure, which may require higher liability limits.
• Higher risk during construction. While renovation work is actively underway, your home faces elevated risks — open walls, exposed wiring, construction materials, and workers on-site. Some insurers add a temporary surcharge during the construction period.

However, not all premium changes are increases. As we'll cover in the next section, certain renovations can actually bring your premium down.

For a detailed breakdown of what drives home insurance costs in Canada, see our guide on home insurance costs in Canada for 2026.

This is where things get serious. If you complete a renovation without notifying your insurer, several things can go wrong:

1. Your claim gets denied

You finish your basement, install a home theatre, and six months later a sewer backup floods the space. You file a claim — and the insurer discovers the basement was never reported. Because your policy was based on an unfinished basement, the insurer may deny the claim entirely, arguing that the finished space wasn't covered.

2. You're underinsured

Even if your claim isn't outright denied, you may be underinsured. If your policy covers $400,000 in replacement cost but your renovations brought the true replacement cost to $500,000, the insurer may only pay a proportional amount — leaving you to cover the gap out of pocket. This is called the co-insurance penalty.

3. Your policy is cancelled

Insurance is a contract based on accurate information. If your insurer discovers material changes you didn't report — especially ones that increase risk, like a pool or knob-and-tube wiring removal — they may cancel your policy for misrepresentation. A cancelled policy makes it significantly harder (and more expensive) to get coverage from another insurer.

4. Liability gaps

If a contractor is injured on your property during an unreported renovation, or if the renovation creates a hazard that injures someone later, your liability coverage may not respond if the insurer wasn't informed of the work.

The bottom line: the cost of a phone call to your insurer is zero. The cost of a denied claim can be hundreds of thousands of dollars.

Not every renovation increases your insurance cost. Several upgrades reduce risk, and insurers reward that with lower premiums. If you're already planning renovations, consider prioritizing these projects:

• New roof: A roof that's less than 10 years old reduces the risk of water intrusion and storm damage. Many insurers offer discounts of 5–15% for a new roof.
• Updated electrical wiring: Replacing knob-and-tube wiring, aluminum wiring, or a fuse panel with modern breakers and copper/Romex wiring significantly reduces fire risk. Some insurers won't even cover homes with outdated wiring — upgrading opens up more (and cheaper) coverage options.
• Modern plumbing: Replacing old galvanized or polybutylene pipes with copper or PEX reduces the risk of leaks and water damage, one of the most common and expensive home insurance claims.
• Security system: A monitored alarm system — especially one with fire, smoke, and water leak detection — can lower your premium by 5–10%.
• Water leak detection devices: Smart water sensors that automatically shut off your water main when a leak is detected can earn additional discounts from many Canadian insurers.
• Backup sump pump or battery-powered sump: If you have a basement, installing a backup sump pump reduces sewer backup and flood risk.
• Impact-resistant windows and doors: Upgrading to storm-rated windows in areas prone to wind or hail can lower your premium.

When you complete any of these upgrades, notify your insurer and ask them to reassess your premium. Many homeowners miss out on discounts simply because they never told their insurer about the improvement.

If you're undertaking a major renovation — especially one where walls are opened, the roof is exposed, or the home is partially uninhabitable — you may need builder's risk insurance (also called course of construction insurance).

What it covers

Builder's risk insurance covers damage to your home and building materials during construction. This includes:

• Fire, lightning, and explosion
• Windstorm and hail
• Theft of building materials and installed fixtures
• Vandalism
• Water damage (in some policies)

When you need it

You should consider builder's risk insurance if:

• The renovation cost exceeds $50,000
• The project involves structural changes (removing walls, adding rooms)
• Your home will be partially or fully uninhabitable during construction
• The project timeline exceeds three months

What about the contractor's insurance?

Reputable contractors carry their own liability insurance and workers' compensation. However, the contractor's policy typically covers their liability — not damage to your home or your belongings. Always ask your contractor for a certificate of insurance and verify what it covers, but don't rely on it as a substitute for your own coverage.

Builder's risk insurance in Canada is typically a temporary policy lasting 3 to 12 months. Costs vary based on the project value but generally run between 1% and 5% of the total construction cost. For a $100,000 renovation, expect to pay $1,000–$5,000 for the policy.

Before you sign a contract, demo a wall, or order materials, work through this checklist to make sure your insurance is aligned with your renovation plans:

1. Call your insurer before the project starts. Describe the scope of work, the expected cost, and the timeline. Ask how it will affect your coverage and premium.
2. Ask about builder's risk insurance. For major projects, confirm whether you need a separate course of construction policy or whether your existing homeowner's policy provides adequate protection during renovation.
3. Verify your contractor's insurance. Request a certificate of insurance from your contractor showing general liability coverage and workers' compensation. Confirm the policy is active and that coverage limits are adequate.
4. Update your replacement cost estimate. After the renovation is complete, your home's replacement cost will be higher. Ask your insurer to update your dwelling coverage to reflect the new value.
5. Review your liability limits. If you're adding a pool, deck, or other feature that increases injury risk, consider increasing your liability coverage from $1 million to $2 million.
6. Document everything. Take photos before, during, and after the renovation. Keep receipts for materials and labour. This documentation is invaluable if you ever need to file a claim.
7. Check for premium discounts. If your renovation includes risk-reducing upgrades (new roof, updated wiring, security system), ask your insurer about applicable discounts.
8. Confirm permit compliance. Renovations done without required building permits can void your insurance coverage. Always pull the proper permits and have work inspected.

For a comprehensive understanding of what your policy covers — and what it doesn't — review our guide on what home insurance covers in Canada.

Home renovations are one of the best ways to increase your property's value, improve your living space, and make your home truly yours. But every renovation changes your home's risk profile — and your insurance needs to keep pace.

The single most important thing you can do is notify your insurer before any significant renovation begins. It's a simple phone call or online update that takes minutes, and it ensures your coverage stays intact when you need it most.

Don't let a dream renovation turn into a coverage nightmare. Update your policy, verify your contractor's insurance, consider builder's risk coverage for major projects, and take advantage of premium discounts for risk-reducing upgrades.

Your home is likely your most valuable asset. Protect it — before, during, and after every renovation.