Can Renovations Affect my Homeowners Insurance?

A home is more than just a place to hang your hat. It’s a place where you can entertain, raise a family, or just relax. It’s an investment built to offer you and your loved ones comfort and security.  And most importantly, it’s yours. You searched far and wide for the right home, and this little slice of heaven has the perfect amount of charm to satisfy your needs.

But after a few years, you may start feeling that the charm you fell in love with is losing its spark. Time can add value to a home, but it can also add to your costs, depending on what kind of wear and tear occurs over the years. Or maybe you just walked out in the backyard one day and decided that a pool would look great next to the patio.

There are a lot of good reasons to renovate your home. And with that, understanding how renovations can affect your homeowners insurance policy will greatly benefit your project.

Before You Renovate

As you research your new project, it’s important to remember to let your insurance company know about everything you plan to do. No matter how simple or insignificant it may seem, your policy is always subject to change. An insurance agent can assist you with covering the cost of any potential damage that may occur; as long as they had prior knowledge, they should be able to adjust your policy to reflect the renovations made to your home accurately.

One of the most useful tactics is to take photos of the property before beginning any construction project. Having detailed notes and proof of the original structure will not only make your insurance agent happy, but it’ll also make your wallet happy too, especially if you’re going to take the project on yourself. A good agent will be able to provide liability insurance through your policy that will protect you – and any visitors – from taking on an unwanted financial burden.

It’s never a good idea to surprise an agent with undocumented upgrades – they could cause them to drastically change your policy or even drop you altogether. So make sure to call before you get started.

Now that you’ve made the proper arrangements and are ready to begin, here are some home renovations to consider, as well as a few to watch out for.

Intelligent Home Improvements

There are many different kinds of renovations, but it’s best to start with what your home needs. While some projects will get you points for style, they will undoubtedly cost you more in the long run. When choosing an alteration, practicality is king. Start by looking at a new roof or replacing the floor. These types of renovations are excellent investments in your home that can increase your property values while lowering your insurance costs. And if you choose to install a more impact-resistant roof, your overall risk decreases along with your premiums.

Have an older home? Inspecting your plumbing and electrical systems may be wise. There have been a lot of significant improvements in these areas over the last decade, and spending a little more on replacing faulty wiring and pipes lowers your risk of damage and injury – and reduces your water costs and energy bills. And the icing on the cake: discounts on your insurance policy.

Mixing Business with Pleasure

It’s hard not to stare into your unused backyard and think, “A pool would fit perfectly back here.” But be careful. Aside from the painstaking work that goes into creating that small slice of nirvana on your property, there are a few other things to consider.

First off, you may need increased liability insurance before you can embark on building that pool, patio, or hot tub. Many remodeling projects will require an additional cost to cover the risk of injury and will continue to affect your homeowner’s insurance.

What about finally finishing that basement? When renovating a space with better flooring and insulated walls, your rates will vary based on the newly renovated footage. It costs less to insure an unfinished room than one with painted walls and a carpet. However, renovations also increase your home’s value, and unless you’re planning on installing a jacuzzi, the risk shouldn’t change all that much.

Kitchens and Bathrooms

Two of the most popular home improvements can also lead to significant savings on insurance premiums. However, they can also cost you even more during construction if you’re not careful. This is a time when contacting your insurance agent before beginning will pay out big time; by taking the time to get in touch with your provider, you will be better suited to protect yourself against liability for any damage that may come from the work at hand.

With projects like these, having a trusted contractor is incredibly helpful. Even though marble looks impressive, it’s expensive for a reason, and if you’re not careful, you could lose money on the investment. Find a professional who you trust to keep your renovations within your budget. Some contractors might even be willing to replace any faulty wiring or plumbing systems they find while they’re redesigning the home of your dreams.

The Bottom Line

Planning for new home improvement is exciting. And just like everything else in life, it can also be wildly unpredictable. No matter what you plan to accomplish, it’s always best to take the following precautions:

  •     Make a plan
  •     Take before and after pictures
  •     Get in touch with your homeowner’s insurance agent
  •     Document every addition or alteration to your plan
  •     Ensure every liability is covered
  •     Consider the cost-to-value ratio
  •     Limit risk as best you can

And remember to get excited! This home is yours, and you’ve worked hard to make it your own.

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