Planning a Big Renovation? Your Insurance Might Not Cover You
A kitchen gut. A second-storey addition. A main-floor overhaul. If you’re a Canadian homeowner planning a major renovation, one of the most overlooked—but essential—questions to ask is:
Will my home insurance cover this?
The answer: probably not.
Many standard homeowner insurance policies exclude or suspend coverage during major renovations, especially if your home becomes vacant, unoccupied, or structurally altered. Without proper coverage in place, any damage—like a fire or theft—could leave you footing the entire bill.
That’s why there are two specialized forms of renovation insurance built for Canadian homes under construction:
- Builder’s Renovation Insurance
- Course of Construction (COC) Insurance, also called Builder’s Risk
Let’s explore what each policy covers, when you need them, and how to avoid the costly mistake of assuming your standard policy is enough.
Why Your Regular Home Insurance May Not Apply During Renovations
Most homeowners believe their insurance has them covered, no matter what’s going on inside the home. But once you begin major construction, your risk profile changes dramatically.
Insurers may suspend or cancel your policy if:
- You vacate the home for more than 30 days
- You remove key structural elements (walls, roof)
- You introduce major fire or water risks (like rewiring or plumbing work)
- You fail to notify them before starting a reno
Here’s why it matters: if a fire breaks out during your kitchen remodel or a thief steals $15,000 in building materials from your backyard, your insurance company could deny your claim unless you had proper renovation coverage in place.
Builder’s Renovation Insurance: For Occupied Home Renovations
Builder’s Renovation Insurance is designed for projects where:
- The homeowner remains in the house (either partially or fully)
- The structure remains mostly intact
- Renovation work is extensive but not a full rebuild
This type of policy protects both:
- The existing structure
- The area under renovation
- Materials stored on-site
Common renovation types that qualify:
- Kitchen remodels
- Bathroom overhauls
- Finished basements
- Home additions that don’t require full teardown
- Legal secondary suites
Covered risks often include:
- Fire
- Water damage caused by construction
- Theft of materials
- Vandalism
- Damage to the existing structure from reno work
💡 Tip: If you’re living in the home while the work is being done and your builder doesn’t require you to vacate, Builder’s Renovation Insurance is likely the best fit.
Course of Construction Insurance: For Vacant or Structural Projects
Course of Construction Insurance, also known as Builder’s Risk, is intended for:
- Vacant homes during renovation
- Major structural renovations (e.g., adding a second floor)
- Full gut jobs down to the studs
- Projects where the home is temporarily uninhabitable
This policy provides broader protection and is often required by lenders when the scope of work exceeds a certain threshold.
What’s covered:
- Fire and smoke damage
- Weather-related damage (wind, hail)
- Theft and vandalism of materials or tools
- Collapse of partially built structures
- Some policies cover soft costs like permits, financing delays, or architecture fees
💡 When in doubt, use Course of Construction insurance if your renovation will leave the home unoccupied for 30+ days or completely transform the home’s layout and systems.
Side-by-Side: Builder’s Renovation vs. Course of Construction
| Coverage Feature | Builder’s Renovation | Course of Construction |
| Best for | Occupied homes with updates | Vacant or gutted homes |
| Vacancy allowed | No | Yes |
| Structural work | Moderate | Extensive/full rebuild |
| Risk tolerance | Lower | Higher |
| Typical premium | $350–$800 | $750–$2,000+ |
| Duration | 3–12 months | 3–12 months (extendable) |
| Lender requirement | Sometimes | Often required |
Real-Life Examples: Which Policy Would You Need?
Scenario 1: Kitchen Remodel While Living at Home
You’re replacing cabinetry, flooring, and wiring—but staying in the house. → Builder’s Renovation
Scenario 2: Full Home Gut to Studs
You’re removing all interior walls, electrical, plumbing, and HVAC. You’re living elsewhere. → Course of Construction
Scenario 3: Adding a Basement Suite
You’re digging out, adding plumbing, and installing a new electrical panel—but still living upstairs. → Builder’s Renovation
Scenario 4: Second-Story Addition
Your contractor removes the entire roof. You can’t stay in the home. → Course of Construction
Do I Really Need to Tell My Insurance Company?
Yes. In fact, it’s a legal requirement under most policies.
If you renovate without informing your insurer:
- Your claim could be denied
- Your policy could be cancelled
- You could be personally liable for construction-related damages
The safest course of action? Call your broker before the first nail goes in.
What About My Mortgage or Line of Credit?
Many lenders—including big banks and credit unions—require:
- Proof of valid renovation or COC insurance before releasing funds
- Listing themselves as “loss payee” on the policy
- Confirmation that work meets municipal code and bylaw requirements
If your lender doesn’t receive this documentation, they may delay disbursement or halt funding mid-project.
How Much Does Renovation Insurance Cost?
Premiums vary depending on:
- Location (Alberta, Ontario, BC may have different rates)
- Total value of construction
- Duration of work
- Occupancy/vacancy status
Average premium ranges:
- Builder’s Renovation: $350–$800 for smaller projects
- Course of Construction: $750–$2,000+ for full gut or addition
Keep in mind: You can cancel the policy once the project ends and resume your standard homeowners coverage.
Final Thoughts: Protect Your Home During Renovation
Renovations can add beauty, comfort, and equity to your home—but they also introduce risk.
Whether you’re upgrading your kitchen or adding an entire new floor, don’t assume your current policy will protect you. The moment you change structure, leave the home vacant, or bring in tradespeople, your coverage needs change.
The safest move is to speak to an expert. At Ai Insurance, we help Canadian homeowners secure the right policy based on project size, location, and occupancy.
🔨 Planning a renovation or rebuild? Protect your investment before work begins.
👉 Get a fast, free Course of Construction or Builder’s Renovation quote
