Are you planning on renovating your home? If so, chances are you already know which improvements you’ll be making, such as installing a new floor, replacing your ceiling lighting, or switching to modern paint colors. But, have you given any thought to the impact such renovations may have on your Homeowners Insurance?
Must you also renovate your insurance?
Most house improvements will likely increase the value of your home, consequently increasing its replacement value. It’s therefore crucial to update your Homeowners Insurance policy to ensure you have the right amount of cover in place in case disaster strikes. In this article, we’ll discuss common renovations that can impact your insurance and the additional insurance cover you may need during renovations.
These renovations impact your Homeowners Insurance
Drastic renovations can significantly increase the value of your home. Any of the following home renovations may necessitate an update to your insurance policy:
- Replacing your roof
A new roof will add value to your home, so be sure to notify your insurance company to increase your dwelling coverage limit. Moreover, replacing the roof of your home can also save you money with discounts. Many insurance companies offer a small homeowner discount for replacing a roof under a specified age. You may also qualify for further discounts if you live in areas prone to hurricanes, severe winds, or hail, et cetera, and use sturdy roofing materials that can withstand extreme weather conditions when renovating.
- Building a pool
A pool affects your Homeowners Insurance in two ways:
- Increases your home’s rebuild value
- Increases your risk of liability
The standard policy comes with $100,000 in personal liability cover, which will help pay the medical and legal costs if someone is injured in your pool and decides to sue you. However, to cover any pool-related accidents, your insurer may require a fence with a gate around the pool.
- Renovating your kitchen
Giving your kitchen a makeover can significantly increase the value of your home. If you fail to update your policy, you may not be fully reimbursed if disaster strikes. Imagine upgrading to marble countertops and installing custom cabinets, only to receive a pay-out if disaster strikes that will barely cover laminate countertops and generic cabinets? Although a home makeover will likely increase your premium, if the electrical or plumbing systems also receive an upgrade in the process, you may qualify for a discount of as much as 20% on your premium.
- Adding space to your house
Need more room for the family? Adding on to your house will likely increase its replacement value and increase your home replacement cover. The increased cover may, in turn, increase your insurance premiums.
What additional home renovation coverage do you need?
There are multiple scenarios where your home renovation may not be covered by your Homeowners Insurance policy, requiring you to acquire additional home renovation insurance. Here are some examples:
- Vacant Home Insurance.Vacating your home may leave you uninsured, so consider purchasing this policy to ensure your home is protected while you’re not occupying it.
- Contractor Insurance. Ensure your contractor has General Liability, Builder’s Risk, and Workers Compensation insurance to protect you from financial loss resulting from third-party property damage and bodily injury, property damage or theft and workplace injuries during the course of construction. The general contractor must be fully insured to avoid shouldering the risks which will cause a claim and homeowners policy cost to be higher.
Did you know that your Homeowners Insurance will not cover the building over the course of construction? Ensure that a Builder’s Risk policy is secured either by yourself, the homeowner, or the General Contractor.
Assess and adjust your Homeowners Insurance coverage
Once your renovation is complete, an insurer will only fully cover the cost of damage to a house if your insurance coverage is at least 80% of your house’s total replacement cost. So, make sure your insurance is adjusted to account for the value of the new space to avoid a denied claim.
