Renovation Projects and Your Home Insurance: What You Need to Know

Spring is well and truly underway, making way for summer and the itch to remodel areas in your home. A long, cold winter got you thinking about how you could improve the space, and now you’re planning and scheduling–this is really happening! As exciting as that is, we have to bring you down to earth with some practical reminders about how common home remodels could seriously impact your home insurance policy. Now that you have that refinished space in your grasp, don’t let life’s what-ifs ruin it for you. Here’s what you need to know.

Why Renovations Affect Your Home Insurance

So you’re planning for an updated kitchen, you want to add a room on, or you’re finally getting around to finishing the basement. These common household upgrades and remodeling projects will inevitably affect your home insurance policy, and here’s why:

• Home value increases
• Replacement cost changes
• New risks are introduced

Let’s look at these factors one at a time. 

Increased Home Value

Structural additions to your home, be them additional living areas, second stories, or a garage, all add usable square footage to your home and property. And additional usable space could very well change your home’s valuation. This additional value could directly impact the amount of coverage you need to ensure that you could replace everything if you experienced loss due to fire or some other covered risk. A regular policy review with your trusted source for home insurance in Kent is one way you can be sure that you aren’t left unprotected.

Changes To Replacement Cost

Remodels to kitchens and bathrooms often mean adding high-value upgrades in the form of appliances, finishes, fixtures and built-ins. Depending on your home insurance coverage limits, the value of these new items may outstrip the replacement provisions that are included in your policy. If it costs more to repair or replace your new setup than it would have what you had prior, it’s time to reevaluate your home insurance coverage. You want to ensure that the cost to repair or replace your newly remodeled areas is incorporated into your policy.

Introduction of New Risks

So you’re finally going to spring for that pool or hot tub. Maybe the kids won and you’re looking into adding a trampoline. Or you might need to keep pets and children contained with a sturdy fence and you’re adding a deck you can access from your second story entrance. Outdoor improvements like these and others can introduce previously unknown risks to your home and property. Most insurance providers will insist on additional coverage to protect against the liability that more risky additions like these can present. From injuries and property damage to loss from fire, you want to be sure that the investment you just made is protected going forward.

So how might your coverage needs change, specifically? These areas could see an increased need:

• Increased Dwelling Coverage: You may need to raise your coverage limits
• Updated Personal Property Coverage: New furniture, appliances, or systems
• Liability Coverage Adjustments: Especially with pools, trampolines, or rental spaces
• Additional Structures Coverage: Sheds, detached garages, etc.

Failure to make the needed adjustments to your home insurance policy limits puts you at a serious risk for being underinsured should something go wrong and you suffer damage or a loss. Because your limits may fall lower than your risks, you could even face claim denial or reduced payout in a worst-case scenario. And since policy limits may not encompass the updated values of your home and personal property, there could be financial gaps after a loss that lead to you paying out of pocket for some of the total cost of repair or replacement.

Key Steps Before, During, and After You Renovate

Now that you know what’s at stake, what can you do to prevent an unfortunate situation from happening to you? Well you can’t control everything, but you can be sure that you’re protected from common risks. Here are some steps to take before a contractor ever steps foot on your property:

• Notify Your Insurer: inform your insurance agent about major renovation projects and see if they recommend any additional coverage
• Verify Contractor Insurance: ensure that your contractor is fully insured, that their crew is protected, and ask for proof of insurance to review policy limits
• Document Everything: Take "before" photos and keep records of contracts and permits 

Verifying your contractor’s insurance coverage and that they are licensed to do the work you’re hiring them for are very important steps. Without properly vetting them, you could end up trying to file a claim later on, only to find out that the problem is due to the contractor’s poor workmanship or that they performed unpermitted work, which are often reasons for claim denial. 

Once the project is underway, and depending on the scope of the remodel, you may want to look into additional insurance coverages. For instance, if the project is especially extensive, you may not be able to stay in your home while the work is being done. Since no one is living there, your standard liability coverage might not apply or may require a vacancy permit endorsement to protect your property from vandalism, theft, or water damage, for example. If you do opt to live on site during the work, you may need to increase liability limits to cover any potential injuries that you or your family may sustain. There will be plenty of materials on site, and so you may want to consider additional coverage options like Builder’s Risk, Material Theft, or another policy that protects your investment in your home update.

Recommended post-renovation insurance changes are basically what we’ve already discussed: an increase in dwelling coverage, updating personal property limits, and also sharing any safety upgrades with your insurance agent.

Comprehensive Protection With Home Insurance In Kent

Many homeowners don’t realize that renovations, remodels and upgrades can impact their insurance, but the effect can be very real. You can avoid negative impacts to your pocket and your property by making sure that your home insurance coverage is up to the task, well before you start building. Once you know your risks, you can work with your trusted insurance agent to make things right. Get in touch before starting the project, during major changes, and after completion to ensure that your policy gives you a wide enough safety net should things go awry.

At BK Insurance & Financial Services, we’re your partner for protection. Together we can review your current policy and adjust coverage limits as needed. We’ll assess your risks and recommend additional protection while also ensuring compliance with lender requirements. We’re here to help, always. 

Renovations improve your home but also change your risk. Contact us today to make sure that your investment is fully protected.