Even with vaccines rolling out, we still need to keep our distance outdoors to be social.
It’s why, according to a recent survey, almost three-quarters of Canadian homeowners are planning to make improvements to their homes this year. Over half of those Canadian homeowners say outdoor work, including landscaping and decks, will be the most popular projects this year.
It makes sense. Without travel, 46% of those surveyed plan on spending between $1,000-$10,000 on their backyard ideas, or roughly the cost of an annual family vacation.
But, what are the risks to installing a pool, building a new deck, or roasting marshmallows over your backyard fire pit? Will your premiums go up or down as a result of your outdoor home improvements?
How to protect yourself and your backyard upgrades
Matt Hands, Director of insurance for Ratehub.ca, says, “Insurance brokers typically recommend increasing your liability coverage to $2 million. The more you host, the more risk you’re inviting onto your property. It’s not uncommon for a liability claim to surpass the $1 million mark. Best to make sure you have coverage in place. If something unfortunate happens, people may sue and you don’t want to be stuck paying out of pocket.”
He’s not wrong, and for the nominal increase (~$25 a year) to your home insurance premiums, it’s worth it.
Speak with your insurance provider, too. Anytime you do renovations of any kind, your insurer needs to know – from vacant homes to expensive upgrades, or increased risk (or safety), you want the right insurance coverage in place.
Your premium may increase as a result of the upgrades, but it’ll be minimal and worth the peace of mind knowing you’ve protected what you’ve upgraded.
Let’s look at some examples of backyard upgrades and how they might impact your insurance.
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Insurance considerations for pool owners
Pools will significantly increase the probability of a liability insurance claim occurring in the eyes of an insurer, so “you must disclose that you are installing a pool to your insurance provider,” says Hands.
It’s not just the insurer that needs to be notified, “you also need to reach out to your municipal government to request an inspection for a new pool. No municipality will sign off on a pool without an inspection.” The inspection will include checking for things such as gates, fences, and other safety precautions. A lack of inspection leads to a lack of insurance when you need it most.
But there’s another risk lurking behind all that fun in the sun. If an above-ground pool collapses spilling out tens of thousands of litres of water, your basement could flood. “Unless you have overland water coverage on your policy, you’ll be covering the costs of the renovation.” says Hands.
Overland water is a flood insurance add-on to your home insurance policy. Much like sewer backup, it’s not a default coverage option and must be added. Even if you have an in-ground pool, a significant rainstorm can cause it to overflow. Preparation is key to protection.
Again, the most critical part for pool owners is to up their third-party liability coverage to ensure they’re protected.
How insurance works for outbuildings (sheds, gazebos, saunas, and pergolas)
Typically any outbuildings (or detached structures) are covered for up to 10% of your home’s value as listed on your insurance policy. It’s likely enough money for an average home depot shed or gazebo.
But, if you’re thinking of building a sweet boathouse with a built-in kitchen, TV, and wet bar to entertain your guests, “consider upping your outbuilding limit. Keep in mind, some insurers won’t allow you to up the limit, so you might consider switching companies as you don’t want any undue hardship if you need to repair or replace the paradise you’ve built.” says Hands.
For example, upgrading your old dilapidated shed to a luxury oasis may cost $40,000 to build. If something were to happen, you don’t want to be paying out of pocket to rebuild or replace it. Always remember to keep your provider informed and your coverage up to date. It may increase your insurance by a few hundred bucks a year, but provide you with valuable peace of mind to keep the party going.
Remember, if your home insurance company won’t allow an outbuilding coverage increase, consider comparing home insurance quotes from companies that will. Switching insurance companies to ensure both your paradise and its memories remain intact is worth the effort.
Insurance for decks & fences
Decks and fences, whether attached to your home or not, are part of your primary dwelling coverage. A material change to your backyard requires you to notify your insurer so that you have coverage for the upgrades.
Now, if you’re replacing a worn-down wood fence with another, or replacing the boards on an existing deck, it shouldn’t affect your premium.
However, installing a multi-level deck with stairs on both sides and a built-in hot tub, your insurance company should know. They’ll likely increase the replacement value of your home, which will result in a slight increase to your premiums – likely only $10-$20 per month.
The risk of someone falling down all those stairs increases, so, again, make sure to discuss increasing your liability coverage.
The bottom line
If you’re upgrading your backyard, always remember to keep your insurance company in the loop. While an upgrade will likely increase the value of your home, you may see a small increase in premiums, but the marginal cost is worth the added protection. Don’t forget to consider adjusting your liability coverage to $2 million to offset any increase in associated risks. Even an out-of-place stepping stone can result in a significant claim for a broken ankle if that visitor chooses to sue.
Don’t let a small mishap ruin your plans for a great summer full of social gatherings.
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