How can I get home renovation insurance?

The home renovation trend shows no signs of slowing down. 

In recent years, many homeowners have chosen to renovate their homes instead of moving due to several reasons. Homeowners feel motivated to make changes to their living spaces instead of purchasing new homes. Factors such as a strong housing market, lower interest rates, and remote work have contributed to this motivation.

Despite challenges like supply chain disruptions, interest rate changes, and a shortage of contractors, home renovation projects remain popular. 

Consider some of these statistics from Houzz::

• The median amount spent on home renovations in 2022 was $22,000. 
• Kitchens and baths dominate, with homeowners spending a median of $20,000 on kitchen upgrades and $13,500 on primary baths.
• Homeowners investing in renovations plan to stay in their homes. More than 61% saying they hope to remain in their homes for a decade or more following renovation work. 

How renovations affect home insurance

Painting and changing light fixtures can improve the appearance of your home, but they do not qualify as construction projects. That means you probably don’t need to contact your insurance provider to let them know your plans.

But, if you’re doing projects that could raise your home’s worth, you need to call your insurance company. If you update your bathroom by replacing vinyl flooring with tile or upgrading the countertops, it increases your home’s value. You should make sure your insurance coverage reflects these improvements.

Remember: Your home insurance policy protects your structure based on the replacement cost at the time you acquired your homeowners insurance. If you’re remodeling a kitchen or adding on, you might make changes that impact the value or size of your home. Notifying your insurance carrier about these changes protects you. 

If your remodeled kitchen catches fire, your insurance will pay to rebuild it. But if you don’t tell your insurance company about the upgrades, they might not cover the cost of these improvements. If the worst were to happen, you need to talk to your insurance agent to make sure your policy is up-to-date. 

Be aware that your homeowners insurance policy may require you to notify your carrier about home improvement projects before the work even starts. It’s good practice to check your policy or call your agent before you begin any work on your home. If you are doing extensive work, your insurance company might recommend or require additional coverage, which is also sometimes called “builder’s risk” coverage.

What is home renovation insurance?

There are many new trends regarding covering renovation projects, but the most common is to add an endorsement to your homeowner’s policy or a separate builder’s risk policy. In the end, your insurance agent will be able to navigate these options for you. Your agent will want to make sure that your homeowners insurance covers your home-improvement project while the work is happening. 

Policies may have exclusions or limitations on coverage for renovations that the insurance company is not aware of. It is extremely important that your insurance policy has the correct replacement cost value, including your renovations. 

The contractor working on your home improvement project should also carry insurance — and it’s important for both parties to have appropriate coverage. In fact, you should ask to verify the insurance coverage for anyone working on your home improvement project. Accidents can happen, and this is particularly true when working with machinery in an area under construction.

If you are doing the work yourself, it’s still important to notify your agent. Damage, injuries, and replacing stolen or vandalized materials can be very costly. Should you decide to complete the renovations yourself rather than hiring an external professional, you will want to ensure the home coverage will apply as some carriers require the work be done by licensed contractors. 

Insurance coverage for vacant homes

If the work you are having done is extensive and disruptive enough that you decide to decamp to another residence until the work is completed, make sure you contact your insurance carrier.

Some home insurance policies do not provide coverage for vacant homes. Therefore, it is important to ensure that you have adequate protection during renovations. This will help you avoid any unexpected surprises in the future.

Insurance policies may limit coverage for empty houses to prevent burglaries. They may set a maximum number of days for covering a home when no one is living there.

If you’re thinking of leaving your home during renovations, talk to your insurance agent to ensure your home is protected. This is especially important if the renovations will take a month or longer to complete.

Will my homeowners insurance premiums go up if I renovate?

The short answer is that it’s complicated. Your premium might increase by a little, a lot — or not at all.

Generally speaking, if you are renovating and putting money into your home, you will increase its value. When that happens, the cost of rebuilding your home may increase. This is what insurance coverage is designed to do: replace your home if it is destroyed in a fire, tornado, or other covered peril. 

If you have an old home and want to renovate it, you may want to add fire-resistant features. These features could include a sprinkler system or updating the electrical wiring. These changes make your home safer, reducing fire risk and potentially saving you money on insurance.

Replacing an old roof with a new one is another home-remodeling project that could lower your premium. With new materials, the risk of expensive leaks and water damage will go down.

This is why the real answer — depending on the age and condition of your home — might be a mix of increases and decreases. When you upgrade your home, its value increases, and so will your premium. But by including additional safety features or bringing an older home up to current code, you could save some money.*

How can I get home renovation insurance?

Renovating or remodeling your home can add value and years of additional enjoyment. Big projects can also be stressful and expensive during construction. Be sure to take some time before you start a project and find out what your insurance carrier requires as far as home renovation insurance coverage.

Not sure where to start? Talk to an Expert Agent today.

Disclaimer: 

* Savings, if any, vary based on a consumer’s profile and other factors. Contact your insurance agent for more information.

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