Spring is a popular time for people to start thinking about home renovations or upgrade projects that need to be done. The warm weather creates a buzz and spurs homeowners on to tackle the various projects ahead.
It can be easy to be excited about your upcoming home renovations and completely overlook the insurance part of the process. Along with the planning stages of the project, your insurance provider should be notified before any work has begun.
How much of your renovation affects your home insurance? Here’s what you need to know before getting started.
The importance of notifying your insurance company
Before any work has begun you should contact your insurance provider with any plans for construction renovations. Depending on what you do, it can either increase or decrease your insurance costs.
It’s important to inform them of any work being done because your insurance rates are based on your current home value. Your policy is designed to cover the replacement cost of your home in the event of a total loss.
Making significant changes (i.e. renovations) can increase the replacement cost and change the classification cost of your policy. That is why insurance providers need to have updated information so they can adjust your policy accordingly, otherwise a claim can be denied.
Will my insurance increase or decrease?
It depends on what you are doing to your house. Some projects can cause your premiums to rise, while others can lower them. If you are doing upgrades to make your home safer, they will likely decrease, while an increase in premiums can signal a higher replacement value of your home after the renovation is complete. Here are a few things to consider:
Renovations or upgrades that may lower your insurance costs:
- New roof
- Updated plumbing and wiring
- Installing a new furnace/air conditioner
- Security-related upgrades: fire monitoring system, alarms, and video cameras
- Water mitigation devices: sub pumps, backflow valves, or water alarms
These types of upgrades will improve your home by making it more energy efficient, more secure, and up to current building codes.
Renovations or upgrades that may increase your insurance costs:
- Pools
- Building an outdoor deck
- Additions
- Custom work
- Major room upgrades (kitchen or bathroom)
These types of renovations directly benefit your living conditions as well as increase your home value. Adding square footage (additions) or a backyard pool will increase your rates because you’ll have to bump up the replacement cost and a pool adds potential risk to your home. It can be dangerous for guests and affect your liability coverage.
Vacating your home during renovations
If you plan to be away from your home while renovations occur, you should inform your insurance provider and ask about a vacancy permit.
Being vacant from your home for 30 days or more could put you in violation of your policy. Most providers don’t cover a period away for longer than 30 days, so you’d be in breach of your contract if anything were to happen while away.
What type of home insurance covers renovations?
Some insurance companies include renovation work in the home insurance policy, but it may be capped at a certain amount, so if the project is valued over that certain amount, you may need to revamp your policy.
Other insurance companies exclude renovation work from the home insurance policy altogether, so that is why it is important to speak to your advisor during the planning stages.
Renovation risks and rewards
Anything can happen during a renovation, workers can get injured on the job, damage can happen to your home and theft can be a possibility with your home being less secure than usual (workers going in and out, etc….) so being properly protected is key.
Finding out what you need to do to ensure your home is protected during the renovation process is paramount. Speaking to your advisor before you get started should be on your to-do list before any work starts. They can re-evaluate your home insurance policy and make adjustments accordingly.
While home renovations and upgrades can be both exhausting and exciting, the result is always worth it! It is an excellent way to add immediate value to your home living situation as well as your future selling costs.
Are you preparing to enter the spring market? Give me a call today 250-509-1078 and I'm happy to assist you in your process.
