Home Insurance: 5 Renovations That Can Affect Your Policy Rates

Discussing home renovation with your home insurance agent is important. It must be the first thing you should do before meeting with your contractor. Renovating a home involves careful checking and planning. Sometimes, excitement takes over. You tend to forget the realities of home insurance.

Many home improvements enhance the value of your house. This could make your insurance coverage insufficient. As a result, you will have a high risk of financial losses. Talking to your home insurance provider can tell you which renovations can trigger low premiums.

Home Insurance: 5 Renovations That Can Affect Your Policy Rates
A man working on his home renovation

1.      Expanding the Living Space

A growing family needs more space. This means adding square footage. The additional space could be in the form of an attic or basement. Additional space inside or outside the house may need post-renovation insurance. A large deck or an annex can increase the value of the property. Consequently, this will need home insurance reevaluation.

Considering other kinds of coverage may be applicable for the new constructions in the homes. A new basement is prone to flooding. Placing insulation, carpeting, and drywall in the basement needs the support of water backup coverage. This is important if the sump pump is in the basement.

2.      Constructing a Home Office

Many home insurance policies protect home-based business equipment. An insurance policy for the home may not cover any damages related to the home business. The home business owner may need to improve the existing home insurance policy. Buying a business policy may also be an order. This applies to home businesses drawing heavy foot traffic in the house.

One option is to endorse the existing policy. This will boost the protection from $2,500-$5,000. A homeowner can also get a business owner’s policy. This adds more coverage to the current policy. The home business owner can also get in-home business insurance. This insurance provides protection for a large company but with smaller premiums and policy limits.

3.      Kitchen or Bath Upgrade

The home insurance policy will be at risk with this type of renovation. Upgrading a kitchen means new cabinets, appliances, and countertops. The homeowner’s policy must cover the new kitchen. Upgrading the policy is the right thing to do. The home insurance agent will help organize the documents for the upgrade. This will lead to a higher premium because the house will cost more.

Upgrading the plumbing and electrical systems in the bathroom or kitchen will give the homeowner an insurance discount. The homeowner may end up with a 20 percent discount. Asking the home insurance agent about the homeowner’s qualification for the discount is a smart financial move.

4.      Roof Renovation

Renovating the roof is not that thrilling at all. However, it can give the homeowner huge savings. This type of home improvement can decrease the home insurance premium. It can give the homeowner bigger discounts if the residence is in an area prone to hail, hurricanes, or windstorms. A brand new, reinforced roof can mitigate losses. Optimal shingles, hurricane straps, and waterproofing treatments can protect the entire roofing system.   

The home insurance agent can use the age of the roof to find out the depreciation schedules. This will help determine the amount of protection the house needs.

Flood insurance is important in flood-prone areas as well. This policy can cover the cost of the leaks and damage to the roof.

5.      Building a Swimming Pool

Home Insurance: 5 Renovations That Can Affect Your Policy Rates
A swimming pool still under construction

Having a pool can raise the value of the home and enhance the status of the homeowner. But, it must also come with a $100,000-$500,000 home insurance policy. This is enough protection against personal liability. It will cover the medical costs of anyone who suffers from an injury in the pool. The coverage will also take care of the legal expenses if someone sues the homeowner.  

Building a fence (with a lock) around the new pool can help protect the homeowner from any liability. The hazard will elevate if the homeowner decides to have a slide or diving board. An automatic locking pool cover can help keep everyone safe when the pool is not in use.

Getting More Renovation Insurance

The current home insurance policy covers the items present at the purchase of the policy. Renovating a home means adding more items and sections to the home. These will need protection as well. During the renovation, the homeowner can purchase construction material insurance. This will cover the costs of the materials in case they are stolen or damaged.

A foundation collapse insurance will take care of the repair costs in case the foundation of the home collapses during renovation. Vacant home insurance will cover the damages while the homeowner stays somewhere else during renovation. It will pay for the repairs of damaged sections the homeowner did not notice until the homeowner gets back.

How Renovations Will Affect Your Premium

You can never be too prudent when it comes to home insurance. It may not seem important for now, but it will be someday when you least expect it. Talking to your insurance agent can clear things up when it comes to your premium. Your rates can increase or decrease, depending on the type of renovation you do.

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