Finishing your basement, adding a sunroom, or upgrading to your ideal kitchen can significantly improve your quality of life at home. However, these types of renovation work might have an impact on your insurance coverage, potentially leaving you underinsured.
If you’re thinking about making alterations to your house — or have already done so — it’s a good idea to review your homeowners policy. Here’s everything you should know about home renovation insurance.
Tell your insurer about your renovation
Before making any pricey improvements to your house, contact your agent or insurance provider. They can explain your policy’s current restrictions and suggest whether you should change your coverage.
For example, your dwelling coverage limit is determined by the cost of rebuilding your home if it is damaged. Because large upgrades typically boost the replacement cost of your home, you may need to increase your dwelling coverage limit.
Installing a fence or a new shed? These fall within your other structures’ coverage, which may require an increase. Also, if you’re purchasing a lot of furniture for an expansion or high-end equipment for a new home theater, consider upping your personal property limit to ensure they’re properly insured.
Finally, if you’re building a swimming pool, you should consider increasing your personal liability coverage limit; the risk of injury or drowning in your pool may make you a target for claims.
Your agent or insurer can help you anticipate how much your premium will increase to reflect your new coverage limitations. If there is a considerable price increase, you may wish to compare house insurance rates from other firms.
Avoid home renovation insurance pitfalls
On top of ensuring coverage, a proactive conversation with your agent could help you avoid potential renovation pitfalls. For example, your agent may recommend adding ordinance or law coverage. This insurance protects you from having to spend out of pocket to keep your house in accordance with local building codes.
For larger renovation tasks, use a certified and bonded contractor with builder’s risk coverage. This insurance protects pricey construction materials from theft or damage while on your site. A building trades group can help you identify a licensed contractor.
You should also inquire about your contractor’s workers’ compensation insurance, which would cover medical expenses if someone is hurt while working on your property. Without this insurance, the worker may bring a lawsuit against you. Check that the contractor’s insurance covers any subcontractors — or, if not, that they have their own coverage.
And, if possible, take plenty of images before, after, and throughout your home restoration job. These may come in helpful if you file a claim and have to repeat the work.
Make an inventory of your property
It is advisable to conduct a home inventory once a year to ensure that you have adequate coverage for your personal goods. Consider taking an inventory immediately following your renovation, while you still have receipts for any large purchases.
You can use a home inventory app or move your phone from room to room, recording videos of everything you own. Concentrate on the most expensive items, and remember to open drawers and closets to see what’s within.
This approach will assist you in determining the appropriate personal property coverage limit and can be beneficial if you need to file a claim. An inventory will clearly indicate what you had before the disaster, making the claims procedure easier.
