Will insurance pay basement reno?

What if I have a fire claim and I didn't get the renovations inspected?

My friends are journeymen and they wanted to help me renovate my basement. My electrician and a plumber gave me a "family rate" and I paid cash. Does this affect my insurance?

What happens if I don't get an inspection? My friends are good at what they do - why pay for something I don't really need? I didn't even bother to get a permit to do the work.

We all know about having friends help us out on a project. Call on your friends to help you build a deck, renovate your basement or landscape the back yard. Everyone works hard, has a barbecue at the end of the day and sometimes there is a little cash spread around.

So what happens when you do have something go wrong, like a fire in the basement? What will the insurance company do?

The first thing that happens in a claim is the the policy is examined to see if the coverage is there. This is why most people will buy a comprehensive or special form of house insurance. If it is not specifically excluded then it will have coverage.

The next issue is proof that the work was actually done. If there has been a big fire and possible explosion then your physical evidence has burnt up and there needs to be some way to show what was lost. When you and your buddies are working on a project it is not unusual for someone to be taking pictures as the work progresses. This could be valuable evidence.

The best protection you have is to advise your agent or broker before the start of the home renovations. Yes, this would increase the value of your home and you might see an increase in premium.

What about not getting an inspection done?

If your broker, agent or insurance company did not ask about getting an inspection done then there is no issue affecting your present claim. Having an inspection confirms that the work is safe and up to code for safety and day-to-day living. Since you have skipped doing something that most people would normally do, you now don't look quite as you did before in the eyes of the insurance underwriter. Your file could be noted and you could be supervised more strictly afterwards.

If you were asked and did not tell the truth then things would go south from there. This would be seen as a deliberate lie. Not telling the truth in insurance-talk is misrepresentation and can void your entire claim. It can also cause the insurance company to cancel your home insurance policy. It will not be easy or cheap to replace.

It is better to be upfront in your insurance dealings. The insurance company is in the business of paying out claims. If an insurance adjuster thinks you are not honest then you could have a lengthy claims investigation and delays build up while you wait for your basement to be fixed.

Keep in mind that our discussion has been about a partial loss. It is not the entire house. If that fire in the basement consumes the rest of the house you could find yourself without enough money to rebuild.

Insurance Answer

Your home is probably your biggest asset. Don't jeopardize it or your insurance rates. Take control of your insurance. If you are going to be cutting corners then don't cut your own throat!

Ask for proof of insurance from the contractor you are using. If that contractor accidentally causes damage to a person or property then your insurance is protected by the underlying insurance they have in place.

Call your broker or agent and let them know what you are doing. Get a permit and follow through with the inspection process.