When you plan to carry out major renovations in your home, you must inform your insurance provider as the renovations can lead to changes in your homeowners insurance coverage types and limits. Depending on the type and extent of renovations performed, the insurer will adjust the coverage which will subsequently affect your premium rates.
How Do Home Renovations Affect My Homeowners Insurance Policy?
Renovations that include upgrades and adding square footage typically increase your home’s value. They also require higher coverage limits that in turn may increase your insurance cost.
You must work with your insurance provider in reviewing your current coverage. They can re-evaluate your new coverage needs and make the required changes in your policy that may increase its cost but you will have peace of mind that your home is adequately covered.
What Type of Renovations May Impact Your Homeowners Insurance Cost?
Revamping a part of your home such as the kitchen with upgraded materials, replacing the plumbing, cooling, or heating system in your home, or adding a new feature to your property such as a swimming pool are large-scale renovations. Necessary adjustments need to be made in your homeowners insurance to provide sufficient coverage for your renovated property.
The type of renovations that may impact your insurance costs are:
- Upgrading the HVAC System
If you plan to upgrade the HVAC system of your home, you must consult your insurance provider. The heating and cooling system renovations involve massive revamping. The insurers may have to make considerable changes to your insurance cost and coverage. However, you may even benefit from their home upgrade discount.
Also, the type of A.C you have in your home determines the type of coverage it has. The central air conditioning systems are covered by the dwelling coverage while window air conditioners fall under personal property coverage.
- Renovating the attic and basement
Before starting a major renovation project of revamping the attic and the basement you must inform your insurer as it usually includes modifying the insulation or the electrical system of the room which may affect the insurance coverage and limit. Also, basements are vulnerable to flooding due to backup of the sewerage and to protect the renovated space from such damage costs, you must have water backup coverage.
- Installing a swimming pool or deck
Adding a swimming pool to your property may enhance its value but also considerably increases the risk factor associated with it. It is recommended that you must increase your home insurance liability limit to $300,000-$500,000. An additional umbrella policy can give you extra safety in the event of a pool-related mishap.
Similarly, for building a new deck or replacing an old one with a new deck, you must talk to your insurer and make appropriate changes in your dwelling coverage as repair expenses for the new deck, if damaged, will be more than for the old structure.
If you get the outdoor space of your home landscaped, your insurer must know about the renovation. They can accordingly increase the landscaping coverage thus protecting you from expenses that may occur due to damage to the landscaped area.
- Constructing a garage, shed, or driveway
Structures that are not attached to the main building such as a detached garage, a shed, or a driveway are covered by other structure coverage in your homeowners policy in the event of damage by a covered risk factor.
However, if you build any of these structures, your coverage requirements will change. So, you must contact your insurer to make the needed adjustments which may depend on the size of the new structure, the materials used, and the HVAC type used.
- Replacing the roof
Unlike other renovations, you may benefit from upgrading the roofing of your home. Since a new roof provides better protection against the named perils the risk factors decrease which may result in your premiums being reduced.
How Does the Dwelling Coverage Function?
Dwelling coverage in your homeowners insurance pays for the repair and rebuilding of your home if the damage is by a covered risk. Its coverage limit is the estimated cost to rebuild your home. The current coverage may not be adequate to cover the repair cost of your renovated home. You must inform your insurer who will re-estimate the rebuilding cost which may impact your premiums.
Does Homeowners Insurance Cover New Additions to My Home?
Homeowners insurance pays you for the losses that you incur due to damage to your property by a covered peril and thus does not include home renovations. If you build new structures on your property that add to your home’s floor plan, you will have to upgrade your insurance coverage too as you will need a higher dwelling coverage limit.
Before you start the renovation work, you must ask for an estimate from your insurance provider of your new increased premium that you may have to pay after the construction of the new structures.
Scope of Homeowners Insurance During Renovation Process
During the renovation of your home, the chances of third-party bodily injury or damage to property are high. You must protect yourself by increasing your personal liability coverage in addition to your contractor’s commercial liability coverage. Also, buying a builder’s risk insurance may be useful in instances when the contractor’s coverage is not adequate to cover all losses.
For protection against theft and vandalism during this period, you may increase your personal property coverage limit.
Are DIY Renovations Included in Homeowners Insurance?
Typically, DIY renovations are not covered by your homeowner’s insurance. However, if you have the professional skill to repair an item damaged by a named peril or your work is approved by a licensed professional, it may be covered. A shoddy DIY work may be denied payment by your insurer.
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