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How Home Renovations Affect Your Home Insurance

Renovating your home can be a complicated and complex process, and the last thing on your mind after paying your contractor, finding materials, and figuring out how to cook when you haven’t had a kitchen for two months is your insurance. But it shouldn’t be, and here’s why:

Renovations can increase your home’s value, which means that the total replacement cost of your home might increase. You might need to increase your coverage so that your home’s value is completely covered. If you’re adding on to your home and adding square footage, that may need to be reflected in your policy as well. This includes both literal additions and conversions of space from non-livable to livable, like converting a garage to a mother-in-law suite or finishing your basement.

Some renovations, such as swimming pools or decks, may beautify your home and increase its value, but they also constitute liabilities. If someone is injured falling off your deck or jumping into your pool, and you’ve failed to inform your insurance agent, you may not be covered.

Other renovations could lower your insurance premiums. If you have an older roof, replacing it could actually save you some money on insurance – not to mention the money you save on repairs should the old roof be damaged in a storm or start to leak.

Additionally, the act of renovating or remodeling could have some impact on your insurance cost and needs. While your builder or contractor is required to have insurance – and you should ensure that he or she does – it might not cover things like loss or damage to the expensive equipment and building materials that are being stored on your property during the renovation.

If you’re converting a space into a home office or workshop for your home business, you may also need additional insurance coverage. Your homeowner’s policy will have a limit to the amount of home-business related inventory or equipment that it covers, so for anything beyond that figure, you may need to purchase separate business insurance, or add additional coverage to your current homeowner’s policy.

It’s crucial that if you’re performing a substantial repair, improvement, or renovation that you let your insurance agent know. It’s possible that your insurance needs won’t change, but they just might. And while it is possible you may face an increased premium, you just might save some money instead. So if you’re planning to renovate, it’s time to get your agent on the phone.

Do you need to inform your insurance agent about your upcoming remodel? Talk to one of our expert agents to find out!