Home renovations and remodeling are huge investments that not only affect how your home looks and functions but also impact your home insurance. Insurers are always on the lookout to minimize risks and losses, and home renovation projects are judged based on whether they increase risk or not. Whether you want to buy and renovate a previously-owned home, preparing it for sale or just giving your old home a new look, below are five renovations that can either increase or lower the cost of your homeowner’s insurance.
1. New Roof
Older roofs have a high risk of damage, which makes it more likely for homeowners to file for claims. It doesn’t help that roofs bear the brunt of adverse weather conditions like hurricanes, strong winds, and even snow which make them highly susceptible to damage. Getting a new roof creates a positive or negative impact on your homeowner’s insurance, and you need to inform your insurer before performing the renovation.
Getting a new roof especially in areas that suffer from inclement weather may result in up to 20% savings in homeowners’ insurance premiums. This is because the newer the roof, the less risk of damages. You may even get a discount for reinforcing your roof with hurricanes straps and using the best roofing materials to counter the effects of adverse weather conditions like hail, wind, and rain if you live in an area prone to such. Since a new roof also improves the value of your home, some insurers may require you to increase your premiums for added coverage.
2. New Swimming Pool
If you are thinking of building a new swimming pool on your property, you should talk to your insurance agent first. A swimming pool attracts lots of traffic, which increases the chances of accidents and damage to your property. If anyone swimming in your new pool gets hurt, they may hold you responsible even if you are not at fault. A pool with a diving board poses a much greater danger.
With a swimming pool attracting lots of people and exposing you to more losses, your personal liability protection will be inadequate in case of accidents and injuries. As such, your insurer will not only increase the amount of liability coverage due to increased risk but also because of the improved value of your home. Your insurer may even require you to build a fence around the pool to reduce accidents.
3. Home Expansion
Home expansion projects like building extra rooms or turning the basement into a living space increase the livable square footage of your home. The new additions come with increased home value, as well as the increased cost of rebuilding and replacement. This attracts an increase in insurance costs to cater to the value of the new space since you will need insurance to help rebuild them in case of damage.
Normally, insurers want a dwelling coverage of at least 80% of your home’s replacement value. If you added a deck, an extra bedroom, built a garage, or finished the basement complete with drywall, carpets, and insulation, you will have to talk to your insurance provider. For completed basements, extra coverage may be necessary especially if the sump pump is located in the basement.
4. Kitchen and Bathroom Makeovers
Giving your bath an upgrade and remodeling your kitchen with better materials and appliances will have an effect on your insurance. These makeovers boost the value of your home, making the existing coverage inadequate for rebuilding your new bathroom and kitchen in case the inevitable happens.
If you give your kitchen a facelift with the best granite countertops, new flooring, and better appliances, you will need to talk to your insurer to adjust your insurance coverage. Take before and after pictures to use as proof of the upgrade if need be. In the event that you also update your plumbing and electrical during your bath or kitchen renovation, you could be eligible for insurance discounts as they reduce the possibilities of flooding and fires.
5. Building a Home Office
If you work or run a business from home, you may need a home office. Before you go ahead and build one, think about if your existing homeowner’s insurance is sufficient to cover the damage to your office in case of an incident like fire. Keep in mind that most homeowner’s insurance limits coverage to the business property to $2500. They also do not cover loss of business data, records and even injuries that may occur in your home office.
With this in mind, you will need to have your insurance revised upwards especially if your business utilizes heavy machinery and inventory, or brings a lot of people into your property. The good thing is that you can have your limit increased, or your policy expanded with home business endorsements. Another option is to get a separate policy for your business. If you run a small firm without much assets and traffic, your homeowner’s insurance could be just fine.
Seeing as how major home renovations can impact your homeowner’s insurance, it is critical that you consult your insurer before undertaking any major renovation. This way, you can establish the sustainability of your home given the adjusted insurance cost, and also find ways to save through insurance discounts. It also helps incase of mishaps during the renovation process.
