How Renovations and Home Improvements Can Affect Your Insurance Policy

Renovating your home is an exciting journey that can transform your living space and improves its value. However, it’s essential to understand how these changes might impact your homeowner’s insurance policy. From increasing your home’s replacement cost to introducing new risk factors, renovations can significantly affect your coverage and premiums. By staying informed and communicating with your insurer, you can help ensure your home remains adequately protected throughout the renovation process and beyond.

The Impact of Home Renovations and Improvements on Your Insurance Policy

The following is a look at how home improvements can affect your coverage and premiums: 

• Increased home value—One of the most significant ways renovations can affect your insurance is by increasing the value of your home. Upgrades like a new kitchen, bathroom or an additional room can raise your home’s market value. As a result, you may need to increase your dwelling coverage to help ensure that your policy reflects the new replacement cost of your home. Failing to update your policy could leave you underinsured in the event of a loss.

• Enhanced risk factors—Certain renovations can introduce new risks. For example, adding a swimming pool or a hot tub can increase the likelihood of accidents, which might lead to higher liability coverage needs. Similarly, installing a wood-burning stove or fireplace can raise the risk of fire, potentially increasing your premiums. It’s crucial to inform your insurer about these changes so they can adjust your policy accordingly.

• Improved safety features—On the flip side, home improvements can reduce insurance costs. Installing safety features like a new roof, storm shutters or a security system can make your home safer and less prone to damage or theft. Many insurance companies offer discounts for these types of upgrades, so be sure to ask your insurer about potential savings.

• Temporary vacancies—During significant renovations, you might need to vacate your home temporarily. Standard home insurance policies often have limitations on coverage for vacant homes, as they are more susceptible to vandalism and other risks. You may need to purchase additional coverage or a builder’s risk policy to protect your property during this period.

• Documentation and communication—Keeping detailed records of all renovations is essential. Save receipts, contracts and any permits related to the work done. This documentation can be invaluable when updating your insurance policy and in the event of a claim. Always communicate with your insurance agent before starting any major renovations to understand how your policy will be affected and to help ensure you have adequate coverage.

Learn More

Whether you’re increasing your coverage due to a higher home value or taking advantage of discounts for safety improvements, staying informed and proactive is key to maintaining the right level of insurance for your newly renovated home. Contact Poole Insurance Agency today to discuss your homeowners insurance.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.