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Home renovation work is a thrilling aspect of homeownership. If you’re adding a kitchen, overhauling your bathroom, or constructing a second level, such changes will enhance the value and usability of your home. Yet many homeowners are not aware of the fact that even small renovations can drastically alter their home insurance policy. In certain situations, failure to disclose a renovation to your insurer may invalidate your coverage altogether. In this post, we’ll discuss how renovations impact your home insurance and how you can ensure you’re still covered.
Why Renovations Impact Home Insurance
Home insurance is determined by the risk and value of the property. Renovations tend to modify both. When you renovate, you’re likely
Adding value to the home
Modifying the structure
Introducing new risks (e.g., electrical work, water damage risk)
Which Renovations Can Impact Your Insurance?
Not all updates will necessitate an insurance update, but some certainly will.
Structural Alterations
If you’re tearing down walls, constructing an addition, or reconfiguring your home’s space, your policy must be revised. These types of changes usually add value to your property and rebuild cost.
Kitchen or Bathroom Renovation
These are among the costliest areas to recondition and usually involve plumbing and electrical modifications. That indicates a greater rebuild cost and maybe a greater risk of leaks or electric fires.
New Roof or Windows
These are good upgrades that actually reduce your premium because they decrease the risk of storm damage or leaks. But your insurance company must know to take the discount.
Home Office or Business Space
If you’re building a room for a home business, your policy probably isn’t extending to business equipment or liability. You might need additional coverage.
Swimming Pools or Hot Tubs
These improvements are “attractive nuisances” since they add liability risk. You’ll require greater liability protection.
- Decks, Fencing, and Landscaping
These may boost the replacement cost of your property even if they’re relatively minor. Inform your insurer for an accurate valuation.
Buying home insurance
What Happens If You Don’t Tell Your Insurer?
Not making changes to your insurer can have serious implications:
Denials of claims: In case a fire or accident occurs as a result of unreported renovations, your insurance company can decline to pay.
Cancellation of your policy: Insurers can cancel policies upon discovering that you’ve made substantial changes without reporting them.
Risks of underinsurance: If you haven’t upgraded coverage, you might not be fully compensated in case of loss.
Even if the renovation wasn’t the cause, a failure to report it can still invalidate your coverage for a breach of policy conditions.
Do You Need Renovation Insurance?
Yes, in most situations. Renovation insurance, or a builder’s risk policy, covers you on an interim basis while your house is being built. It covers against:
Theft of building materials
Vandalism
Fire or storm damage when you’re building
Injuries to workers (assuming not already covered by the contractor’s policy)
If you use a contractor, have them carry workers’ compensation and liability insurance. Otherwise, accidents can leave you liable.
Tips to Stay Covered During Renovations
Here’s how to ensure your home insurance remains active during renovation:
Warn Your Insurer in Advance
Always notify your provider ahead of time before embarking on a renovation. They can determine the risk and recommend extra coverage if necessary.
Update the Rebuild Value
Your home’s replacement cost may go up after a renovation. Adjust your policy limits accordingly so you’re fully protected.
Get Documentation
Keep records of permits, costs, receipts, and contracts. These documents help your insurer assess the added value and replacement cost.
Check Contractor Insurance
Confirm that your contractor is licensed and insured. Ask for a certificate of insurance as proof.
Consider Temporary Coverage
For major projects, consider a builder’s risk policy or temporary renovation coverage to remain protected while construction is in progress.
Will Renovating Always Make Premiums Go Up?
Not always. Although some projects can increase your premium because of added value or risk, others can decrease it.
Conclusion
Renovating your home can be an exciting way to improve your living space and increase your property value — but it’s not without insurance implications. Whether it’s a bathroom makeover or a major extension, it’s critical to keep your home insurer in the loop. Doing so ensures your coverage remains valid, your home is fully protected, and your peace of mind is preserved. So before you pick up the phone and call the contractor or get out that sledgehammer, call your insurance company. A little chat now can save you a whole bunch of aggravation later on.
