An Insurer’s Guide to Home Renovations

June marks National Homeownership Month – a month celebrating the value owning a home brings to families, communities, and neighborhoods nationwide.

While owning a home is exciting, one of the best parts is thinking of ways to improve and renovate it.

With the warmer summer months upon us and the amount of home renovations increasing across the country, it’s important to note how different home improvements impact your homeowner’s insurance. Below are a few important reminders before you plan a home improvement project.

Renovations that could increase insurance rates

Home improvement projects often increase the value of your home. However, an increased home value often leads to an increased cost of home insurance. It can also raise your premiums if the renovation requires you to increase your coverage limits or poses greater risks and liability. The following home improvement projects could increase your insurance rates:

  1. Building a swimming pool
  2. Adding an office
  3. Building on an extension
  4. Upgrading or remodeling a kitchen or bathroom

Renovations that could lower insurance rates

On the other hand, renovations that make your home safer, like updated electrical or plumbing systems, could help lower insurance rates due to decreased risk and liability. The following are popular examples of home improvement projects that can help lower rates:

  1. Renovating or replacing a roof
  2. Upgrading wiring or plumbing
  3. Adding security systems or sprinklers

Do you need to tell your insurance provider of your renovation plans?

Yes! You should always tell your insurer of any home improvement projects you are planning. By informing them of your plans, you can work together to adjust your current coverage and policy to match your home’s new value. It’ll also help you avoid any gaps in coverage, get additional liability coverage, and ensure protection in case of damages.

Final tips to limit risk

Home renovations are exciting but can be risky. Utilize these tips to ensure coverage and guidance on your homeowning journey:

  • Research contractors and ensure you’re working with a properly licensed and insured contractor
  • Ensure contractors have liability and worker’s compensation insurance
  • Mitigate fire risk by always keeping flammable materials away from the property and in a well-ventilated area
  • Keep the construction area secure to prevent accidents or possible vandalism
  • Document your renovation with photos and detailed descriptions
  • Maintain consistent communication with your insurance provider on the progress of the project
  • Keep proper building permits on file with the applicable municipality