Planning a home renovation is exciting, but it’s essential to understand how the construction and resulting improvements can affect your insurance. Whether adding a new room or upgrading your kitchen, you will need to update your home insurance during renovations to ensure you have adequate coverage. We’ll explore how renovations can impact your policy and why it’s critical to keep your insurance provider informed.
Home Insurance During Remodeling
If you’re tackling renovations on your own, it’s important to know that you are assuming all the risks. Remodeling increases the likelihood of someone getting hurt and your existing policy might not include those risks. Speak with your broker before starting renovations to ensure your home insurance covers injuries during the process.
If you’re working with a contractor, know that typical homeowner’s insurance overlooks coverage against incomplete or defective work if the contractor isn’t insured. Minimize risk by hiring a reputable general contractor and ask them for a Certificate of Insurance before starting your home repairs. Make sure their policy includes General Liability to cover losses due to negligence and errors.
How Vacancy Affects Home Insurance During Remodeling
It can be stressful to live in your home during renovations, so some people choose to leave for the duration of the remodeling. If that sounds like something you might do during renovations, check your home insurance policy. Some policies become void if your home is unoccupied for longer than a specified window, usually 30-90 days. Consider requesting a vacancy permit from your insurer to make sure this doesn’t happen.
Home Replacement Value Insurance After Remodeling
It makes sense that any changes to your home would therefore affect its replacement value and your overall premium. You are obligated to report any home changes to your insurer to guarantee your insurance policy reflects the most up-to-date value of your home.
Home Repairs that Increase Insurance Premiums
Depending on what kind of home repairs you make, insurance costs can either go up or down as a result. Here are some of the most common types of home renovations that increase insurance premiums:
- Additions: Adding to your square footage will increase your replacement value and therefore increases your overall rates.
- Upgrading kitchens and bathrooms: Upgrading these rooms has a significant impact on your home’s overall value and will increase your insurance cost as well.
- Basement apartments: Similarly, converting the basement to an apartment will increase your home’s value and premium.
- Pool, deck, trampoline: These are generally considered liabilities so might increase your monthly costs.
Home Repairs that Lower Insurance Premiums
In contrast to the list above, you can lower your home insurance with these repairs, as they are generally investments in your home’s safety:
- Update electrical wiring: Knob and tube wiring commonly used in older homes poses a huge risk. Updating to ensure you’re up to current building codes will eliminate that risk and lower your rates.
- Install new HVAC system: This investment in a more energy-efficient home will be reflected in lower insurance costs.
- Update plumbing: Installing a backwater valve can lower your monthly costs by reducing the risk of basement flooding.
- New roof: Depending on what kind of materials are used, a new roof can lower costs by more than 10%. However, solar panels may require you to have additional coverage, so consider your options carefully.
Ensuring Adequate Coverage After Renovations
Once renovations are complete, make sure to review your policy to ensure it reflects the full value of your home. You may need to increase your coverage limits or add specific endorsements for valuable additions like a new deck or upgraded appliances. Set a meeting with your insurer to re-evaluate your home insurance and make adjustments accordingly.
Home renovations are an exciting way to add value and function to your property, but they come with important insurance considerations. By understanding how home insurance during renovations affects your policy, keeping your insurer informed, and ensuring adequate coverage, you can protect your investment and enjoy your newly updated space with peace of mind.
