Working with Professionals
Dmitrii Pavlenco, Commercial Insurance Specialist at Federated Insurance, gave us some answers to the questions we’ve heard about Builders Risk insurance in B.C.
What Kind Of Insurance Should Your Contractor Carry?
Dmitrii: “It depends on what you’re doing. For a small renovation, like a bathroom, where you’re not moving out of the home, you should confirm that your contractor is carrying enough liability coverage. Depending on the value of your home, $2 million should be more than sufficient, but the average carried by contractors like MAC Reno Design-Build is around $5 million.
“For a large renovation, where you are packing everything up and moving out of the home and placing it in the care and custody of the builder or contractor, you will need a course of construction policy to provide coverage for the existing structure as well as anything that you’re putting in during the renovation. For example, your house right now is valued at a million dollars, and you’re doing a half-million-dollar renovation. In this example, your course of construction insurance should be at least $1.5 million.”
How Does Builders Risk Coverage Work?
D: “What’s actually covered is the building itself. So with our example of the $1 million house with the $500,000 renovation, course of construction provides coverage for the building. If there were a fire, and the whole $1.5 million structure went up in flames a couple of weeks before the renovation was done, we would pay for the building itself. The contractor would go back in and rebuild it, as this basically covers the full replacement cost of the building. As well you can insure against loss of profits or soft costs to the policy, like architectural fees, design fees, or legal expenses that pile up because you have to go back and redo the job. And there are optional coverages, like an earthquake, flood, sewer backup, and other perils that you can add to give you the coverage you need.”
Does my Homeowner’s Policy Cover Anything?
D: “In the example I shared, a homeowner’s policy would likely decline the claim because the house had been vacant for more than 30 days. The same would go for claims against theft, damage, flood, etc.
“If you’re packing everything up and putting it in storage for the duration of your renovation, your valuables may be protected through your homeowner’s insurance or through the storage facility if you’ve opted for insurance through them, but if your home is vacant for 30 days or more, it’s likely that any claims would be declined, but it does depend on the homeowner policy.”
What are Warranties?
D: “Whenever you see the word ‘warranty’ in insurance, that’s something you’ll need to pay attention to, as it means an action or safeguard that you need to have in place to maintain coverage. For a building project, it might mean you have to have fencing, lights, and cameras on 24/7 in order to maintain your coverage. And if you don’t, and something happens, your claim might be declined outright in some cases, or your $1000 deductible goes up to $100,000, depending on the warranty and coverage.”
MAC Reno is your full-service home renovation and custom home building team in Victoria
Regardless if you’re doing a small bathroom renovation or a whole home remodel, it’s important that you reach out to your insurance agent to ensure you have the right insurance coverage for your home. You’re making a significant investment in your home, and going without insurance just isn’t worth it. As a full-service, design-build renovation and construction team here in Victoria, we can help you make the right decisions around all aspects of your project. Contact us to see why we’re known as Victoria’s most trusted contractor.