How Home Renovations and Your Insurance Affect Each Other

Home renovations are one of the most exciting and rewarding activities you can take part in. 

Not only do remodeled spaces add value to your home and give it a fresh new look, but they also present an opportunity for you to customize your living space.

However, when embarking on a renovation project, there’s much more to consider than just how the change will affect aesthetics. You should keep in mind how these renovations may impact your insurance coverage as well! 

In this blog post, we will discuss how home renovations and your insurance policies affect one another and what you need to know before breaking out the toolbox!

Types of Renovations That Increase Home Insurance Rates

A major renovation can significantly raise both the value and cost of your home insurance. 

Based on the Insurance Information Institute’s (Triple-I) analysis, replacement values of homes have increased by 13% in the past year due to inflation and supply chain issues. That’s why assessing your coverage before renovating is crucial. If you plan to start on one of the most popular home renovation projects, you must know what to expect.

Here are some of the renovations that can increase your home insurance rates.

Pool Construction

Your home can be valued higher if you add a pool, incentivizing would-be buyers. Pools, however, are considered “attractive nuisances” and increase your liability risks, resulting in a higher homeowners’ insurance rate.

Setting up a home office

If you work remotely or own a home-based business, adding an office could increase your home’s value. However, it could also increase your homeowner’s insurance rates, or you might have to purchase an endorsement for additional coverage.

Space expansion

Sometimes, a home needs to be altered to accommodate a growing family. 

This can involve modifying the floor plan and adding more livable space to the house, such as converting a basement or attic into a bedroom. But if you expand your living space to add new square footage, your insurance premium will probably increase since you will need more housing coverage.

Remodeling your kitchen or bathroom

In Remodeling Magazine’s 2022 Cost vs. Value Report, a kitchen or bathroom remodel can provide a more than 50% return on investment. 

Upgrades such as granite countertops or custom cabinets may require you to increase your dwelling coverage, usually at an additional premium. Additionally, you may need to increase your dwelling coverage if you wish to rebuild your new kitchen or bath with the same newly upgraded materials.

A Homeowner’s Guide to Considerations

• Making improvements without notifying the insurer can boost a house’s value but may render the policy inadequate and leave you at risk of uninsured losses.
• Contact your independent agent to ensure you are properly insured when renovating your home.
• Independent agents can help determine the right policy to cover structure damage. It must also cover the cost of home rebuilding at current construction prices.
• In addition, independent agents can discuss whether an umbrella policy is needed.

Is It Necessary to Increase My Homeowners Insurance After Renovating?

Before or after renovating, you may need to increase your homeowner’s insurance coverage, depending on the type and value of the renovation. 

An insurance company determines your rate based on the square footage of your home and the cost of repairing or rebuilding the home based on its age, such as plumbing and HVAC systems, as well as its building materials.

It is clear that home renovations and your insurance are integrally connected.

That’s why you should always consider what effect the renovations will have on your insurance policy before beginning a project. Without the right coverage, you could find yourself liable for damages resulting from renovations and related activities. 

If you plan to have a home improvement and have questions about your homeowner’s insurance, contact us at Northeast – MetroWest Insurance Agency.

With the right insurance coverage, you can enjoy the peace of mind that comes with knowing your home renovation project is properly protected!