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home cents

My family and I recently embarked on that most stressful domestic endeavour: the home renovation. When we decided to finally modernize our 70s kitchen and create a playroom in the basement for our two kids, my husband and I felt reasonably confident we had done our homework.

We found a contractor with great references, shopped around to find the best deals on quartz and hardwood and made ourselves very familiar with the IKEA catalogue. We had decided to avoid the drywall dust and stray nails and move out for the six weeks of renovation, so we scoured Craigslist and found a great condo in a lovely neighbourhood for a decent price. The day our contractor started opening up walls, we were ensconced in comfortable accommodations, making regular visits back home to monitor what was happening at the homestead.

A few weeks into the renovation, Sean was catching up on mail, including our house insurance renewal. After scanning the policy, he casually dropped this nugget of information: "By the way, did you know that we're not covered by our insurance while our house is being renovated?" Um... oops?

This was not something either of us had anticipated. Frankly, we hadn't even thought to call our insurance company to discuss our home renovation. It's a mistake many homeowners make at their peril, says Anne Marie Thomas, manager of sales and new business development for the Insurance Hotline. She says homeowners should contact their house insurance company well before they break ground.

"There are all sorts of things people simply don't think about when doing a home renovation," she said. "For example, if you have to vacate your home for a renovation, let your insurance company know because it's a violation of your policy if your home is vacant for more than 30 days."

If you are going to be out of your home for a substantial time period, Ms. Thomas says you can ask your insurer for a vacancy permit. "It might cost 20 or 50 dollars more, but it's worth it," she said.

Even if you are out of your house for less than 30 days, a substantial renovation could still affect your coverage and you may need to modify your policy. "If there's exposed walls and that sort of thing your insurance company might change your policy to a building under construction," she said. "Because if you think of it from an insurance company's perspective, if you've got walls torn down and a big gaping hole in the roof and it rains, they're on the hook for all your items. So they would exclude that, for example."

And what if someone breaks in during your renovation and burglarizes your home? Ms. Thomas says you should still be covered, but it depends on the extent of the renovation. One important step is to ensure that your contractor has insurance.

"Check them with the Better Business Bureau and ask to see their certificate of insurance with your address on it," she said. "That way, they're responsible for some liability. If one of their workmen gets hurt on your property, that's going to be on their insurance policy. And by this kind of behaviour, you're demonstrating to your insurance company that you've done due diligence with respect to being a responsible policy holder while you're working through this renovation."

For homeowners who've just completed a renovation without their insurance company's knowledge, Ms. Thomas recommends letting them know, pronto.

"Something as simple as updating the kitchen and the bathroom can add thousands of dollars to your home in terms of replacement value," she said. "Your insurance company may want to be provided with receipts, because if, heaven forbid, the home burns, how do they know you just renovated a $5,000 countertop?"

"It might cost you a little bit more in terms of your premium, but paying a little more on your premium makes a lot more sense than paying a lot of money later because you didn't know you weren't covered and you could have been."

Fortunately for my husband and I, everything went off pretty much without a hitch during our reno (which was miraculously on time and on budget) and we didn't have to deal with insurance issues at all. But should we ever decide to make any more changes to our home, we will heed Ms. Thomas's advice and give our insurance company a call.

Like Ms. Thomas says, "It's a lot easier, believe me, to deal with it before something happens."