If you are planning to start a home renovation project, you will need to do more than just get permits for major upgrades. As you budget and plan for the day that you start demolitions, you should be in contact with your homeowner’s agent to find out how this project might affect your insurance policy. Not only are there terms and conditions that a renovation project could breach, there are also coverage considerations you should know about so that you are not leaving yourself at-risk. Here is a breakdown of what you need to ask your agent:
1. Ask if Standard Homeowners Insurance Will Protect You During the Renovation
When you start to tear up tiles or tear down roofing systems, there is more risk of a claim. Something can fall from the roof and hit a child’s head, or someone can walk into your yard and step on a saw. Because there is more risk of a liability claim, some insurers have exclusions that apply while construction is being performed. Ask your agent if these exclusions apply and purchase a specialized plan so that you have liability protection until the project is finished.
2. Will the New Feature Require Special Coverage?
If you are adding a sauna, a pool, a spa, or a detached garage, it is important to find out how much coverage your policy currently provides. Most standard home policies will provide 20% of your dwelling coverage for other structures like a pool, a shed, a patio or anything not attached to the property. If the addition takes you over, you may need to increase your coverage to protect the upgrades.
3. Are New Discounts Available to You?
According to Eisenhauer Insurance Inc., rates are based on several factors, but one of those factors is the age of major systems in your home. If you are upgrading your roof, electrical, plumbing, you may be eligible for discounts that can cut your premiums by up to 20 percent. These discounts are something to keep in mind as you budget the cost versus the return of the project.
4. What Will the New Value of the Dwelling Be?
Your Dwelling Coverage A will pay to repair or rebuild your home if it is damaged or deemed a total loss. If you make upgrades or additions, it is important to consider how these changes have impacted the value of the property. More square footage will definitely require more coverage. Upgrading appliances and materials may require more dwelling coverage and personal property coverage. Discuss the rebuild cost with your contractor and be sure you are fully insured by discussing your current cover with your agent.
A renovation can alter your home insurance and create unique risks. Make sure you understand how your home insurance will be affected, and find out the solutions before you break ground or break through any walls.