7 renovations that can impact your home insurance – Renovating your home is an exciting process that can add comfort, value, and functionality to your property.
Whether you’re adding a new room, upgrading your kitchen, or installing a swimming pool, these changes can have a significant impact on your home insurance.
Unfortunately, many homeowners underestimate how renovations affect their insurance policy, and it leads to coverage gaps or increased premiums. Home insurance is designed to protect your property from unexpected damages and liabilities.
7 Renovations That Can Impact Your Home Insurance
Renovations involve altering the state, structure or feature of some part of your home. If you own a home insurance, here are 7 renovations you carry out that impact the rates or coverage on your insurance:
Kitchen Or Bathroom Upgrades
Upgrading your kitchen or bathroom is one of the most popular renovations, and it significantly increases your home’s value and functionality.
However, these improvements often involve high-end fixtures, appliances, and materials that can raise the replacement cost of your home.
- Impact on Insurance; The replacement cost coverage on your policy may need to be increased to account for the higher value of these renovations. Additionally, plumbing upgrades might lower your premium by reducing the risk of water damage.
- What to Do: Notify your insurer about the upgrades and ensure your policy reflects the increased value of your home.
Adding A Swimming Pool
A swimming pool is a luxurious addition that provides endless enjoyment, but it also introduces significant liability risks. Pools are considered “attractive nuisances” and can lead to increased insurance premiums.
- Impact on Insurance: Your liability coverage will likely need to increase to cover potential accidents involving the pool. Some insurers may also require safety measures such as a fence or pool cover.
- What to Do: Update your policy to include higher liability limits and ensure all required safety precautions are in place.
Building An Addition
Adding a new room or extending your home increases its square footage and value, and this impacts your insurance policy. Furthermore, the added space means higher rebuilding costs in the event of a disaster.
- Impact on Insurance: Your premium will increase to reflect the higher replacement cost of the enlarged home. The materials used in the addition can also affect the rate.
- What to Do: Provide your insurer with detailed information about the addition, including the square footage and construction materials.
Roof Replacement
When it comes to the upper covering of your home, replacing your roof is a critical renovation that both enhance the safety and energy efficiency of your home. Still, insurance companies do consider the condition of your roof when determining your premium.
- Impact on Insurance: A new roof made from durable, fire-resistant materials can lower your premium. Conversely, if you opt for less durable materials, your rates may increase.
- What to Do: Inform your insurer about the roof replacement and provide details about the materials used to potentially qualify for discounts.
Updating Electrical Or Plumbing Systems
Modernizing outdated electrical or plumbing systems enhances safety and efficiency. These upgrades can significantly reduce the risk of fire or water damage.
- Impact on Insurance: Insurers may lower your premium due to reduced risks associated with modern systems. However, they will need proof of the upgrades.
- What to Do: Keep detailed records of the renovations and share them with your insurer to qualify for discounts.
Converting A Basement Or Attic
Transforming your basement or attic into a livable space adds square footage and functionality to your home. However, these renovations come with their own set of risks.
- Impact on Insurance: Finished basements may increase the risk of water damage claims, while the attics might pose fire hazards due to improper insulation or wiring.
- What to Do: Ensure your policy covers these areas adequately and consider adding endorsements for specific risks like water damage.
Installing A Home Office Or Studio
With the rise of remote work, many homeowners are converting spaces into home offices or studios. This type of renovation can blur the lines between personal and business use of your property.
- Impact on Insurance: The standard home insurance may not cover business-related equipment or liabilities. You may need additional coverage or a separate business policy.
- What to Do: Discuss your needs with your insurer and explore options for business property and liability coverage.
Providers That Cover Renovation-Related Insurance
Here are some insurance providers known for accommodating homeowners who undergo renovations:
State Farm
This provider offers flexible policies and additional coverage options for home improvements.
Progressive
Offers competitive rates and customizable coverage for renovated homes.
Allstate
Provides tailored solutions for renovations and discounts for safety upgrades.
USAA
Excellent for military families, with policies that adapt to major home changes
Nationwide
Known for its comprehensive coverage, including add-ons for specific renovations.
Frequently Asked Questions
Do I Need To Inform My Insurer About Every Renovation?
Yes, it’s essential to inform your insurer about any renovations that alter the value or risk profile of your home. Failure to do so could result in coverage gaps or denied claims.
Will My Premium Always Increase After A Renovation?
Not necessarily. While some renovations, like adding a pool, may increase your premium, others, like upgrading your roof or electrical system, can lead to discounts.
How Do I Calculate The New Replacement Cost After A Renovation?
Your insurer can help estimate the replacement cost based on the details of your renovations. Hiring a professional appraiser is also an option.
