The renovation insurance gap Canadians don’t know about

Did you know that major renovations can leave you underinsured? For example, if a windstorm hit your home mid-renovation tomorrow, would your insurance respond?

Major home renovations can significantly increase the value of your home- but they can also leave you underinsured if your policy isn’t updated properly

Canadians are still investing in home upgrades. Residential renovation expenditure in Canada is projected to reach about $61 billion in 2025, showing continued strong homeowner spending on improvements and structural projects. However, many homeowners assume their home insurance automatically adjusts to cover renovations. Too often, it doesn’t.

Why your current policy may fall short

Your home insurance reflects your home as it exists today. It’s based on your current structure, value, and rebuild cost. When you add a second storey or build an addition, you change that risk. You may increase your home’s replacement cost significantly.

If your insurer isn’t informed, you could face:

• Reduced or denied claims during construction
• Liability gaps if someone is injured on site
• Being underinsured after the renovation is complete

In some cases, not disclosing major renovations can void coverage entirely. That turns an exciting project into a very expensive lesson.

What is Course of Construction insurance?

Course of Construction insurance, sometimes called builder’s risk, protects your home while it’s being built or significantly altered.

It can cover:

• The existing structure
• New materials on site
• The renovation in progress
• Certain liability exposures

This coverage is typically required for structural projects. Think additions, large remodels, or work requiring permits. Cosmetic updates usually don’t require it, but structural changes often do. Its best to double check with your broker before starting any project, just to make sure you’re covered.

Renovations Increase Value and Risk

Renovation costs remain elevated across Canada. According to Statistics Canada’s Residential Renovation Price Index, renovation costs increased in 2025 in most provinces, with costs rising more than in recent years due to materials and labour pressures. In the first quarter of 2025 alone, renovation costs rose 0.3 % nationally after a series of quarterly increases in late 2024.

Construction permit activity, a leading indicator of renovation and building momentum, also reached high levels. In 2024, the total value of building permits in Canada rose to $145.3 billion, the highest value seen since 2017, showing strong construction intentions.

Homeowner renovation plans remain strong

Recent survey data show that renovation planning is widespread. Nearly one in four Canadian homeowners (about 25 %) plans to undertake a renovation in the next year, highlighting how many projects may be underway or soon starting.

Planning intentions are consistent across regions as homeowners choose to improve their existing homes rather than move.

Claim story: The uncovered addition

An Ontario homeowner began a $250,000 rear addition. They planned to update their insurance after the project finished. But, midway through construction, a windstorm tore off partially completed roofing. Rain damaged both the new addition and the original structure.

The claim for the addition was denied because the policy did not contemplate an active structural project. This resulted in significant out-of-pocket costs that could have been avoided. A simple call beforehand could have changed the outcome.

Why this gap is often missed

Most homeowners simply don’t know to ask, or assume they only need to update their policy once renovations are done.

To be fair, insurance isn’t top of mind when selecting cabinets or flooring. Contractors and lenders may not suggest checking your policy before work starts. Yet insurers need to know before work begins, especially for larger structural projects.

Another common misconception is that you may assume that the contractor’s insurance will cover the renovation.

At Westland, we take a consultative approach. Its important we’re able to chat with you before a project starts to ensure your policy covers your current home, as well as the work being done. Because insurance should keep pace with your home.

Claim story: Injury on site

In Alberta, a homeowner was completing a full main floor remodel. Unfortunately, a subcontractor slipped and suffered serious injuries, resulting in a lawsuit where both the contractor and homeowner were named.

The homeowner assumed their personal liability coverage would fully respond. Instead, coverage was limited because of the renovation’s scale. Course of Construction coverage with enhanced liability could have reduced that exposure. Renovations create opportunity, but they also create new risk.

What to do before you renovate

Before starting a major project:

• • Call your Westland advisor
  • Share the scope and estimated value
  • Confirm if Course of Construction coverage is required
  • Recalculate dwelling replacement cost after completion

It’s a short conversation that can prevent long-term financial stress.

Planning a renovation? Talk to a Westland advisor before the first wall comes down this can help prevent long-term financial stress. If you’re planning a renovation, let’s review your coverage before construction begins.

Talk to your local advisor today