How Renovations Could Affect Your Home Insurance

May 29, 2023

Nice weather is a great time for renovations. You can look forward to a new, beautiful living space for indoor or outdoor get-togethers. Just be aware of how renovations affect home insurance and talk to your insurer before you get started.

Does home insurance cover renovations?

Depending on what kind of renovations you are doing, your home insurance may not cover your home adequately once they are finished. Renovations can increase home insurance costs.

You could also be liable for an injury that happens while work is being done on your home. Your home could be broken into during renovations, and this may not be covered by your home insurance. Whether you are hiring a contractor or doing the work yourself, review your home insurance policy and talk to your insurer about having the right home insurance for your renovations.

Renovations and liability

You can reduce the risk of a liability claim if you make sure that contractors and subcontractors who work on your renovations have liability and workers compensation insurance. But you could still face a liability claim if a worker is injured while working on your property.

You should also find out if your liability coverage would cover your family and friends if they are helping you with a DIY renovation. Ask your Western Coast insurance expert what coverage you need for your renovations.

You could find issues with your home

Especially in older homes, renovations can uncover issues like old plumbing or dated wiring that need to be addressed. Not doing so could void your home insurance.

Vacating your home

Your home insurance requires you to live in your home. If you will be moving out for a while when renovations are being done, you may need a vacancy permit from your insurer. If you will be doing extensive renovations, you may need to change your home insurance to a building under construction policy and have builders risk insurance.

Renovations can increase home insurance costs

Renovations can increase home value, which is a good investment, but you must make sure your renovation improvements are covered by your home insurance. An increase in your home’s value is one common reason for an increase in home insurance premiums and adding liability coverage is another.

Adding a pool is a liability risk and you will need more liability coverage.
Adding a workspace or home office will mean that you need home-based business insurance.
Custom work and unique design features need extra coverage.
Additions increase the replacement value of your home and your insurance rates.
Kitchen and bathroom upgrades also increase the replacement cost of your home.

Renovations can lower home insurance costs

While renovations will probably increase your home’s replacement value, some types of renovations can decrease the costs of your home insurance.

A new roof can decrease your home insurance premiums by up to 10%.
Replacing old plumbing and knob and tube wiring can get you a lower rate.
Installing a backwater valve can also reduce insurance premiums.
Security and alarm systems can save you money on insurance. A water leak detection system, for example, can lower your monthly home insurance premium.