Finishing Your Basement? Make it Insurance-Proof, Too.
A finished basement is a luxury that many homeowners look forward to one day making a reality. Whether you’re looking to add a bedroom-bathroom suite, or an additional space for recreation in your basement, here’s the insurance savvy guide to getting started.
You should always consult with your home insurance broker or agent before starting any renovations, including finishing your basement. Talking to your insurance provider will help you understand how the extent of your renovation plans changes your home’s value, and how the addition of risks or safety features will affect how much you pay for insurance.
A successful basement renovation should add to the value of your home, which means you’ll want to ensure your insurance policy covers your home’s updated value and contents. Your insurance provider can also advise on how your basement renovation could save you money on insurance – for example: adding additional features to protect your foundation from hazards like water damage.
Safety is paramount during any renovation process, but having contractors and other construction professionals working on your basement increases the chances of someone suffering an injury on your property. Talk with your insurer to guarantee you have the appropriate liability insurance to cover the unique risks associated with a basement renovation. While the liability insurance included in your home insurance policy is typically sufficient for basement upgrades, major renovations may require a separate builder’s risk insurance policy to be in place during the project’s duration.
The installation of an egress window is a crucial basement safety feature that allows residents to escape or firefighters to access the space during an emergency. The Ontario Building Code requires an egress window or door with direct outdoor access for all bedrooms in your home, including the basement.
While egress windows are more of a safety feature than an insurance feature, your finished basement needs to meet all relevant building and safety standards for your homeowner’s liability insurance policy to protect you in the case of property damage or injury. At the end of any renovation, everyone wins when all work is completed properly, and up to code.
Suppose you’re finishing your basement to convert it into a rental apartment unit. In that case, you will need to purchase landlord insurance with premises liability coverage for financial protection if a tenant has an accident on your property. Contents insurance for a basement apartment is also essential to protect any appliances or furniture that you provide as a landlord.
Inspect Your Basement From Top to Bottom
Before you or your contractors start work on finishing your basement, a full inspection of the walls and subflooring is in order, so that electrical, plumbing or excess moisture issues aren’t covered up by drywall and flooring materials. The last thing you want is to have to dismantle your basement’s fresh finishings to find the source of a leak or other problem that becomes apparent before you’ve even had much time to enjoy your new space.
Inspect the current state of any drywall in your basement and consider replacing it with a moisture-resistant product to prevent the growth of mould and mildew that is especially common in basement bathrooms and laundry rooms.
Also, inspect your foundation, walls and subfloor for cracks, hiring professional assistance to repair them if necessary. You can check for excess moisture by taping small sheets of clear plastic onto the concrete floor in various areas. If water droplets have collected under the sheets after several days, it’s an indicator that moisture is seeping through the concrete foundation. In that case, you may want to consider waterproofing the concrete under any flooring installed, which should also be water-resistant, like vinyl or laminate.
Taking note of support beams and special considerations like low ceilings is also essential before starting your basement reno project. If electrical or plumbing work is required, hiring certified technicians and securing the proper permits are necessary steps to ensure your basement is fully covered under your home insurance policy both during and after the renovation process.
Most standard home insurance policies don’t include overland flood coverage, which protects against water damage that originates from freshwater sources outside of your home, like runoff from heavy precipitation or overflowing lakes and rivers.
According to the Insurance Bureau of Canada, the average repair cost for a flooded basement is $43,000. Besides other factors like your basement’s size and the extent of damage, a finished basement with expensive renovations will cost you significantly more to repair. Therefore, even if you don’t live in a flood-prone area, purchasing overland flood insurance and ensuring you have a sufficiently high coverage limit is an excellent investment to protect your finished basement.
In addition to overland flood insurance, check if your current home insurance policy includes sewer backup coverage. Raw, sewage-contaminated water damage in your basement can be especially costly to clean up as it presents additional health and safety risks.
Take Flood Prevention Measures
Your basement renovation is an opportunity to take the extra steps to protect the foundation of your home from flooding.
Ensure there is no existing foundation damage, including cracks in your basement or outside of your home. A compromised foundation vulnerable to flooding can lead to an insurance claim denial if your basement suffers water damage.
Standard overland flood insurance policies can cover water damage from an appliance failure like a washing machine malfunction, but it’s a good idea to take steps to avoid potential damage. Do you have proper drainage near your washing machine? Taking measures to prevent and mitigate the damage of washer leaks will help protect your basement’s finished carpeting and walls.
Install a backflow prevention valve in your home to help stop contaminated water from entering your basement. You may be able to get a subsidy from your municipality for installing this device if you live in an area prone to sewage backups.
You should also consider having a sump pump installed in your basement to protect it from flooding and follow your plumber’s advice for regular sump pump maintenance. Taking these additional measures to keep your basement water-free may also help you save on your home insurance premiums.
Finished or not, basements require as much care as the rest of your home. As your basement graduates from a messy storage area to a new living space full of opportunities, take care of your home’s foundation so you and your family can enjoy it for years to come.
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