Renovation is the act of improving your house. You can either renovate a part of the house or add an entirely new wing. Most people plan renovation before they start working on it to know what work will be involved and how much money should go into the project. These are essential things that need to be done before starting the renovation. But before proceeding with the remodeling project, isn't it necessary to review your home insurance policy with your homeowner's insurance companies?
Remodeling increases the value of your house. Thus, your existing home insurance coverage will not be adequate, and you may pay for the damages in the future. So when you plan a renovation, it is essential to talk to your homeowner's insurance companies and increase the coverage of your homeowner's insurance. If one of the significant changes is done without updating your home insurance, you may pay a hefty amount as deductibles or premiums.
This article will discuss some significant renovation projects and what can or cannot be covered by a homeowners insurance policy. So read on further.
Does homeowners insurance cover renovation?
Your existing homeowner's insurance policy may cover renovations, but it depends on the nature of the upgrades. For example, if you plan a minor renovation, such as painting your house or setting a bookcase in your living room, you may not require updating your homeowner's insurance. However, more extensive renovations like remodeling your kitchen or adding additional units require updating your policy. In short, any changes that increase the value of the house call for reviewing the homeowner's insurance.
So before starting with a home renovation, talk to your insurance agent. They will guide you on how much additional coverage you will need.
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Increase your dwelling coverage
Homeowners should increase their dwelling coverage when they add new units or remodel the entire or part of a house. The dwelling coverage is based on the home's estimated rebuild value. Adding an addition or remodeling will, in turn, increase the rebuild value of the house, and the replacement cost value will also go up. If you don't increase your insurance policy and anything happens to the property, it won't be covered.
So once you finalize your remodeling plan, call up your insurance agent and inform them about the changes you plan to implement. They will update the policy based on the kind of work involved. They will also update you about the probable increase in the amount of the premiums.
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Add vacant homeowners insurance coverage
Major renovations may require you to vacant your house and live elsewhere while the work is going on. So you need to add vacant homeowners insurance coverage if the renovation work requires you to leave the house for a long time. The standard homeowners' insurance does not cover fire, vandalism, theft, and other claims if you are away from your house for more than 60 days. Vacant home insurance offers cover for damages, natural disasters, theft, and other problems while the property is left unattended.
Your insurance company may endorse vacant home insurance to your existing policy or offer separate vacant home insurance.
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Increase your personal property coverage
Most people underestimate the value of their property and don't increase personal property coverage. However, personal property coverage should not be overlooked when you decorate your house with art, antiques, musical instruments, or even wine collections. In addition, if your home gets damaged or burned down due to a fire or any other reason, you will be paid the policy's stated value of the personal property. So if you have not increased your Personal Property coverage, you will be sacrificing a lot of money.
Also, during renovation, many strangers visit your house. Thus, there is a possibility of theft or damage to your personal belongings. So, evaluate your personal property coverage and ensure all valuables are covered.
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Add dwelling under construction coverage
Renovating your house means there will be construction/remodeling material lying around. If you are not careful, there is a risk that the items may get stolen or damaged by accident. Dwelling under construction coverage reimburses you for these losses and takes care of damage to the workers' tools. It will also provide coverage in the event of a foundation collapse.
Dwelling under construction coverage will come with an additional premium. However, most insurance companies do not provide under construction coverage. So you will need to shop around for insurance companies that offer this coverage and compare the different homeowner's insurance quotes.
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Increase your liability coverage
It is mandatory to increase your liability coverage when carrying out home renovation. The personal liability coverage protects you from accidental injuries if workers or construction workers sustain an injury while working on your house or suffer property damage because someone else carelessly damaged the property, and you are held responsible for it. If any of these cases happen and exceed your liability coverage, you will be held accountable for the medical and legal fees accrued.
So, make sure you increase your liability coverage to protect yourself from such unfortunate events.
Also, it is essential to verify that the contractor carrying on renovation work has commercial liability, property damage, and workers' compensation insurance coverage to cover the worker's wages injured on the job.
No-fault-medical payment will help pay for medical bills if your friend or relative gets injured while assisting you in remodeling your house. The insurance company will directly reimburse the medical payments to the injured person.
Consider raising your liability coverage permanently if your home renovation includes adding a swimming pool or a hot water bathtub to protect you from potential lawsuits.
How does renovation affect your homeowner's insurance?
Depending on the renovations you intend to carry out on your house, it might change your insurance premiums. Some upgrades will increase your premiums, while some may provide discounts.
- All home additions, including the swimming pool and upgrades of the kitchen, bathroom, the backyard, installing of valuables and appliances, will require additional coverage and increase your premiums.
- Replacing your roof and hurricane proofing will protect you from hail and storm damage or leaks. Thus, your claims will be reduced and help keep premiums low over time.
Bottom Line:
You need to do many things before starting with renovation or construction work for your house. Renovations are fun and rewarding, but they can come with a cost if you don't plan properly. Make sure your family is safe by consulting your insurance company first. It's better to be safe than sorry!
