Home renovation insurance: Are your renovations covered?
Home renovations can impact your rates, coverage limits, and may require additional coverage to ensure you’re fully protected.
Pat HowardPat HowardManaging Editor & Licensed Home Insurance ExpertPat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.
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There’s a lot more to renovating your house than choosing the right floor pattern or general contractor — you should also consider the impact it may have on your homeowners insurance. If you plan on remodeling your home, you’ll need the right insurance coverage to protect the project from beginning to end.
Once the project is complete, you may need to update your policy to reflect any changes to your home’s replacement cost value. This will ensure you have enough coverage to pay for a full rebuild in the event of a disaster.
If your home is being remodeled, you’ll want to notify your insurance company.
If you add onto your home, you’ll likely need to increase the coverage limits in your policy.
If the renovations involve new construction or force you to be away from your house for an extended period, you may need dwelling under construction coverage.
Get a copy of your contractor’s insurance to ensure they have general liability and workers compensation coverage.
Does homeowners insurance cover home renovation?
Yes, a standard homeowners insurance policy will protect your home against fire, bad weather, theft, and other covered perils throughout the course of renovations. But depending on the extent of the remodeling project and whether you’ve hired contractors or you’re doing the work yourself, you may need to increase your coverage limits for your home’s structure and liability.
4 renovations that can impact your homeowners insurance
Some renovation projects, like adding a room or remodeling your kitchen, increase the amount it costs to rebuild your home. And this also necessitates more homeowners insurance coverage. Before renovations begin, notify your insurance company so your coverage limits are increased as the project progresses.
In other words, if your home is insured for $300,000 and your insurance company determines that renovations increased its replacement cost by $30,000, they may recalculate the dwelling coverage limit in your policy to $330,000.
Here are four home renovations that often impact your homeowners insurance coverage:
1. Home additions
If you’re building a new addition onto your home, you’re likely increasing its replacement value, or the cost to repair or replace the property. And you’ll likely want to increase your policy’s dwelling coverage limit to reflect this higher cost.
While this may increase your insurance premiums, it’s important to keep your insurance company in the loop about updates to your home so that you have enough coverage to pay for a full rebuild.
2. Kitchen renovations
Upgrading your kitchen can significantly increase the rebuild value of your home. If you’re transitioning from veneer to marble countertops or installing new cabinetry, flooring, and so on, you’ll want the limits in your policy to be updated accordingly so you can be fully reimbursed in the event of a disaster.
3. Roof replacement
If you plan on replacing the roof of your home, be sure to contact your insurance company and let them know. A new roof adds value to your home, so your coverage limits will likely be recalculated, and you also may qualify for a discount.
Many insurance companies offer discounted rates if your roof is under a certain number of years old. You may qualify for further discounts if your roof is made with stronger material to withstand windstorms, hail, and leaks.
Here's how much you stand to save on your home insurance rates by replacing your roof:
Methodology: Annual rates are based on our analysis of home insurance premiums provided by Quadrant Information Services in March 2022 for ZIP codes in all 50 states plus Washington, D.C. Annual rates for old roofs are calculated by averaging the cost of policies for a roof that's 10 years old, 15 years old, and 20 years old with each carrier.
4. Installing a pool
Pools can affect your homeowners insurance twofold: They can increase the rebuild cost of your property, and they can also be a liability hazard.
If someone is injured in a pool-related accident and decides to press charges, you’ll likely be responsible for paying out the damages. So if you’re adding an in-ground or above-ground pool, check with your insurer to clarify if it's covered under the liability section of your policy.
Adjusting your coverage limits isn’t the only reason to inform your insurance company of renovations — you should also make sure that the remodeling process itself is covered. There are several types of coverage you may need, depending on the specifics of your home remodel.
Dwelling under construction coverage
Before construction starts, check with your insurer to see if you need any special renovation coverage to ensure you’re fully covered. Many insurance companies offer dwelling under construction coverage that you can add onto your policy for an additional premium.
Vacant or unoccupied home insurance
Your homeowners insurance policy won’t cover perils like vandalism and theft if the dwelling has been vacant for more than 60 consecutive days prior to the loss. If your home renovations require you to live elsewhere for a few months, you may want to consider vacant or unoccupied homeowners insurance.
Many companies offer this type of policy as an add-on to your home insurance. If you get vacant or unoccupied home insurance from a separate insurer, make sure to pause your primary policy before your new coverage begins.
Increased liability coverage limits
If you plan on remodeling the home yourself or you anticipate that a friend or family member will be helping you out, you’ll want to check the personal liability and medical payments coverage in your policy. Do-it-yourself construction projects involving other people open you up to potential lawsuits if the person helping you is injured during the job.
While it’s unlikely that a friend or family member would sue you over a remodeling accident, they may need help paying for medical bills as a result of their injuries. That’s where your policy’s no-fault medical payments coverage comes in.
With medical payments coverage, if a guest is injured in your home, you can submit a claim with your insurer to reimburse them for medical expenses. Most insurance companies offer up to $5,000 in medical payments coverage.
Does homeowners insurance cover structural problems during renovations?
Your homeowners insurance policy specifically covers home structural collapse if it was caused by the use of defective material or methods in construction, remodeling, or renovation if the collapse occurred during the course of the work. That means if that half-finished second story bedroom addition falls through into your family room, the cleanup and repairs may be covered by your insurer.
Do contractors need to have insurance?
Yes, before renovations kick off, ask your contractor or builder for a copy of their insurance policy to ensure they have adequate commercial liability and workers compensation insurance so that you’re not left footing the bill if someone is injured on the job.
Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.