When the unexpected happens, like a flooded basement or a hole in the roof, you might be inclined to fix the damage yourself rather than hire a team of professionals. If you know what you’re doing, going this route can certainly save you some money, but are you still required to notify your home insurance company in some way?
The short answer is: it depends on whether or not you plan to make a claim.
Contact your insurance company before you start repairs
If you’re planning on making a claim, you can still do your own repairs, but you’ll need to notify your insurance company before you start the work so that an adjuster can complete an estimate of the damages. How you file a claim will depend on your specific policy, so be sure to contact your insurance company for details before you begin any work.
If you’re doing the work yourself and not planning on making a claim, you might be hesitant about notifying your insurance company for fear that you could be penalized in the form of higher premiums — something drivers grapple with when it comes to auto insurance claims. Generally speaking, simply asking a question shouldn’t result in higher premiums but there’s no guarantee that once your provider finds out about the damage, they won’t raise your rates when your policy comes up for renewal.
Keep in mind that not all repairs can be completed by a homeowner. For example, electrical work must be completed by a licensed electrician and inspected by the relevant safety authority. You may also need to acquire certain permits depending on the repairs.
When to file a home insurance claim
Sometimes, it's not worth making a claim. The damages simply aren’t worth the hassle of having an adjuster come out and assess the cost of repairs, or dealing with the potential premium increase as the result of making a claim. But there are some instances when you might want to file a claim against your policy.
For instance, when you are fairly certain that the cost of repairs is significant enough that the insurance payout would be worth the effort and hassle of making a claim, you probably want to file one. While you might not claim a $500 broken window that needs replacing after a tree branch impales it, you may want to file a claim if that branch goes through your roof and requires $5,000 in repairs.
A big component of this equation is the amount of your deductible. If your deductible is $1,000 and your repairs are less than or close to that amount, it doesn’t make sense to file a claim. If the damages are significantly more expensive than your deductible, however, it makes sense to put in a claim.
Finally, if the damage to your home was the result of negligence rather than an insured peril, you might want to skip the insurance claim altogether, as your policy isn’t likely to pay out.
Why make a claim if you’re fixing the damage yourself?
The most compelling reason to make a claim on your homeowners insurance when you’re doing the work yourself is so that you’re reimbursed for the damage. The cost of home repairs can escalate quickly, depending on the extent of damage, which is why we have homeowners insurance in the first place.
Most standard home insurance policies reimburse you for the actual cash value, which is based on what it would cost to buy a product in similar condition. You may be able to purchase a guaranteed replacement cost endorsement to cover the depreciation value of your home and contents. This would ensure you receive a similar product but one that is brand new. You will likely pay higher premiums for this type of policy.
Also keep in mind that just because you might have, say, $50,000 worth of flood protection, doesn’t mean you’ll get $50,000 from your insurance company if the damage only works out to $20,000. Your insurer will only cover actual damages, not the maximum coverage amount.
Check your mortgage agreement if you go the DIY route
It’s important to know that if your home is mortgaged, your lender may not let you perform the repairs yourself at all, and may even have a say in who performs any repairs. There may also be a clause in your mortgage contract requiring your lender be named on insurance claim cheques. Be sure to check the details of your mortgage agreement if you’re planning on making an insurance claim.
In addition, it’s important to note that if your DIY repair job isn’t up to snuff and doesn’t restore your home to its pre-loss condition, then you may not be able to file a future claim on your home insurance policy. Your insurance company will want to see proof of repairs, and may ask about any past repairs made to your property in the event of a claim.
No matter if you choose to fix the damage yourself or hire a professional, whether or not you notify your insurance company really comes down to if you plan on filing a claim. If the damage is significant and you plan on filing a claim, or you need to hire a professional for specific tasks, you’ll want to notify your insurance company as soon as possible. If you do opt to make a claim, the Insurance Bureau of Canada has a handy step-by-step explainer for making a home insurance claim.