Renovations and home repairs are inevitable for every homeowner. They help improve comfort and satisfaction, upgrade the home’s functions, increase the property’s value and extend its lifespan.
However, home renovation projects can greatly affect your insurance rates.
Depending on your location, the type of house, and how old your home is, remodeling in the U.S. can cost anywhere from $15,000 to $200,000.
You can keep the costs down by turning easy repairs into DIY projects., but you must consider how renovations affect your insurance policy.
Insurance Policies and Liability Coverage
First, check if your insurance policy includes liability coverage for workmen carrying out renovations
A standard homeowner insurance policy may provide full coverage for minor renovations.
Big projects such as building a pool, kitchen or bathroom, or a new room or office may not be adequately covered, so you may need to refer to your homeowner’s insurance policy.
It’s also important for you to check your insurance policy for any liability coverage limits. For example, a workman may be involved in an accident or get injured during the renovations.
It’s a good idea to increase your policy’s no-fault medical protection.
If, for any reason, your policy doesn’t provide adequate coverage for renovations and any potential liability issues arising from them, you should shop around and compare home insurance quotes before beginning a major project.
You’ll want to put a new (albeit better) policy in place before you start construction.
What Are the Reasons for the Renovations?
Homeowners often renovate their homes for different reasons. They could be experiencing some changes in needs, tastes, and preferences.
The house may even be old or requires some upgrades. Here are some reasons why people renovate their homes:
After Damage From a Natural Disaster
Natural disasters can damage your home. If such happens, you have no choice but to renovate and make your house stronger.
Some natural disasters that cause the most damage to homes include floods, wildfires, winter storms, hurricanes, and tornadoes.
You’ve Bought a New Home That Needs Fixing Up
For some reason, a homeowner may decide to purchase a fixer-upper house. Such a place will require reconstruction or redesign, but it allows for personalization.
However, you should know that it can be difficult to insure a home that requires substantial repairs and renovations.
Upgrading or Extending Your Home
It’s quite common for homeowners to want additional space. You may need a new room for your children, a new home office, an extra bathroom, or an extended kitchen.
Instead of relocating to another house, it’s much easier and cheaper to upgrade your current home.
Renovations That May Increase the Cost of Your Insurance
Small renovations such as new paint or fixing a pipe burst shouldn’t impact your homeowner’s insurance.
But remodeling tends to increase your home’s value and the cost of your home insurance.
Here are some renovations that may increase your insurance premium:
Kitchen or Bathroom Upgrades
An upgrade to your kitchen or bathroom can increase the estimated rebuild value of your home.
This applies to expensive renovations such as marble countertops, expensive appliances, and new cabinets or flooring.
You might have to increase your policy’s coverage or compare home insurance quotes.
Building a Pool
Having a pool in your home can be satisfying, but you need to understand how it can affect your homeowner’s insurance.
Installing a pool can increase the value of your property and become a liability hazard.
You’d have to increase your liability coverage just in case someone gets injured in or around your pool.
Building a Home Office (With Protection for Office Equipment)
If you work from home and want a home office, you should check how building one may affect your policy.
A standard homeowners insurance policy only protects equipment for home-based businesses for up to $2,500.
You’d have to add an endorsement to your insurance policy to cover more expensive assets.
Building an Addition to the House
A home addition is bound to increase your home’s square footage and ultimately, your home’s value.
You’d have to increase your dwelling coverage and pay a higher premium. Compare home insurance quotes to ensure you’re getting the best rates.
Renovations That May Lower Your Insurance
Certain home renovation projects can reduce your home insurance premiums.
For example, using stronger materials or trying to make your house safer can help to unlock discounts or lower your insurance rates.
Replacing the Roof (With More Durable Material)
It’s always a good idea to replace the roof of your home with stronger material. Insurance companies tend to provide more coverage for homes with newer roofs.
You’d also get a good reduction on your insurance premium.
Fortifying Your Home Against Natural Disasters
Although your homeowner’s insurance covers most damages from natural disasters, it’s essential to make efforts to fortify your home.
Some steps to take include using fire-resistant building materials, reinforcing doors and windows, and installing new garage doors.
Improving Home Security
A home security system is sure to increase the safety of your home. For example, homes with alarm systems are less likely to be broken into.
Improving your home security can also help to reduce your home insurance premium.