clock October 26, 2021 comments No Comments flowchart Homeowners InsuranceOur Blog tag Liability

Before the hammers start to swing, you should consider your insurance coverage. Your homeowners insurance policy  may protect you during renovations, but in some cases it may fall short.

For instance, your policy may exclude coverage if you decide to do the project yourself. Even if you are using contractors, here are a few reasons you should talk to your insurance agent before your project begins.

Renovations Increase Your Home’s Value

You’re putting money into your home, which normally increases it value. This also means that it will cost more to rebuild should you ever experience a loss.

For instance, your policy currently offers dwelling coverage of $400,000. You invest $70,000 in an upgrade and extension to the kitchen.

Your home has more square footage now and the kitchen includes granite countertops and new cabinets. Your cost to rebuild has increased to $470,000, but your policy only covers you up to $400,000.

If you don’t increase your policy limits, you could find yourself underinsured if an incident occurs. Any amount over your policy limit comes straight out of your pocket.

Renovations Increase Your Liability Risk

Your existing liability limits may not be sufficient during or after your renovation. These limits are particularly important if you are employing someone other than a contractor.

Your insurance agent may recommend a higher no-fault medical protection limit on your policy. If a worker does get hurt, they can submit their medical bills to your insurer instead of taking you to court.

If your renovation adds an “attractive nuisance” to your property such as a swimming pool or hot tub, you may need a permanent increase in your liability coverage through an umbrella policy.

Vacant Home Coverage

If you need to store your belongings and move out of your home during renovations, you may need vacant home insurance.

Depending on your insurer, a home without personal belongings for an extended time (usually 30 or 60 days) is no longer covered under your homeowners policy. This is because it is more susceptible to vandalism and damage when it is left unattended.

If you will store expensive materials on the property during your renovation, your insurance agent may recommend temporary coverage for theft and loss too.

Project Best Practices

If you are hiring a contractor, ask to see their Rhode Island registration/contractor number, general liability policy and proof of workers’ compensation coverage. You can confirm the validity of their license here. Keep a copy of both insurance coverages for your records.

Also keep all receipts and paid invoices during the project. Take photos of the completed work too. These are important records that testify to property value if you ever need to file a claim.

Insurance Premiums

A home renovation that increases the value of your home or upgrades materials may lead to higher premiums. However, certain improvements may lead to discounts.

For instance, wind-resistant roofing, storm shutters, updated plumbing or electrical, and security upgrades can reduce your premiums, sometimes by as much as 20 percent.

Considering a renovation can affect your insurance in so many ways, it makes absolute sense to talk to us before you begin your project. We can close insurance gaps to ensure you’re well-protected during and after your renovation.

Leave a Reply

Your email address will not be published. Required fields are marked *