Does Home Insurance Cover Renovations in Canada? 2025

Updated March 2025 · 10 min read

Renovating your home changes your risk profile in ways that can affect your home insurance coverage — sometimes dramatically. Many Canadians are unaware that their standard home insurance policy may not fully cover them during a renovation, and that failing to notify their insurer can void coverage entirely. This guide explains what you need to know before starting any renovation project.

How Renovations Affect Your Home Insurance

Home insurance policies are based on the current state of your property. When you renovate, several things change:

• Your home's replacement value increases (more expensive to rebuild)
• Construction creates new risks: fire from tools/materials, theft of materials, liability for workers on site
• The home may be partially unoccupied or left unsecured during construction
• Structural changes may create new liability exposures

If you don't tell your insurer about a major renovation and something goes wrong, they may deny your claim on the basis that your policy didn't reflect the actual risk at the time of loss.

What Does Standard Home Insurance Cover During Renovations?

Most standard home insurance policies in Canada will cover:

• Damage to the existing structure from covered perils (fire, lightning, windstorm) — but may exclude construction-related causes
• Your existing contents inside the home
• Personal liability for visitors — but not necessarily for contractor workers

Standard policies typically do NOT cover:

• Contractor tools and equipment left on site
• Building materials stored on site before installation
• Damage caused directly by the renovation work (e.g., a plumber's torch starting a fire)
• Worker injuries on your property (that's the contractor's WSIB/WCB and liability insurance)
• Theft of building materials or contractor tools

Vacancy Clauses: A Major Risk

Most Canadian home insurance policies contain a vacancy clause — if your home is unoccupied for more than 30 consecutive days (sometimes less), coverage may be suspended or significantly reduced. During major renovations where the family temporarily moves out, this clause can leave you with minimal coverage at the exact time your home faces the most risk.

Contact your insurer immediately if you plan to vacate during renovations. They may offer a vacancy permit that maintains coverage, often at an additional premium.

Builder's Risk Insurance

For major renovations, a builder's risk policy (also called course of construction insurance) is the right solution. This specialized policy covers:

• The structure under renovation
• Building materials on site (before installation)
• Temporary structures (scaffolding, site trailers)
• Soft costs (architect fees, permit re-application) after a covered loss

Builder's risk insurance is typically purchased by the contractor for large projects, but homeowners can and should confirm coverage. For owner-managed renovations or projects where you're acting as your own general contractor, you'll need to purchase it yourself.

Cost: Typically 1–3% of the total construction value annually. A $100,000 renovation project might cost $1,000–$3,000 for builder's risk coverage during construction.

Contractor Insurance Requirements

Your contractor should carry:

• Commercial general liability (CGL): Minimum $2 million — covers damage they cause to your property
• WSIB/WCB coverage: Covers their workers if injured on your property
• Tools and equipment insurance: Covers their tools on site (their problem, not yours)

Ask for proof of all three before work starts. If a contractor's worker is injured at your home and the contractor lacks WSIB/WCB, you may be found liable under provincial workers' compensation legislation.

After the Renovation: Update Your Policy

Once renovation is complete, update your home insurance policy to reflect:

• The new, higher replacement value of your home
• Any new outbuildings, decks, or additions
• New high-value items installed (custom cabinetry, designer fixtures)
• Updated square footage if applicable

Failing to update your policy after a major renovation can leave you underinsured. If your home burns down and the policy doesn't reflect the improved replacement value, you'll be responsible for the gap.

Does Renovation Affect Your Home Insurance Premium?

It depends on what you renovated:

• New roof: May reduce your premium — insurers view a new roof as lower water damage risk
• Updated electrical (knob-and-tube replacement): Significant premium reduction — old wiring is a major fire risk
• Updated plumbing: May reduce premium for older homes with galvanized or lead pipes
• New alarm system: Typically 5–15% discount
• Added secondary suite: May require separate dwelling coverage or landlord policy
• Home addition increasing replacement cost: Premium increases to reflect higher coverage limit

Renovation Insurance Checklist

1. Notify your insurer before starting any major renovation (typically defined as $100+ or structural work)
2. Confirm your coverage remains in place during construction
3. Ask about vacancy implications if you're moving out
4. Verify your contractor's CGL insurance and WSIB/WCB clearance
5. Consider builder's risk insurance for large projects
6. Update your policy when renovation is complete with new replacement value
7. If adding a rental suite, consult your insurer about appropriate coverage