Can a Home Remodel Change Your Home Insurance Rates?
Remodeling your home will impact the cost of your homeowners insurance. In some cases, it will increase your rates, but in others it might cause your rates to drop.
Commonly, making significant upgrades to the home will increase the value of your property. Therefore, it will take more expenditure by the home insurance company to pay for any damage that your home sustains in the future. Therefore, you might have to buy more coverage, which will up your premiums.
Additionally, you might see increased rates if you add features to the home that make it more of a liability. For example, installing a swimming pool or elevated deck could significantly increase the risk of someone getting hurt in your home. Therefore, your rates might rise.
Still, if home upgrades increase the safety features in the home, then you might see your rates decrease. After all, the safer the home, the lower your risk might be of filing a home insurance claim. For example, if you re-wire the home, install a security system or re-structure your roof, you will make the home better able to withstand damaging hazards. Therefore, your rates might drop.
Do You Need Coverage During Construction?
While a remodeling project is ongoing, your homeowners insurance needs to change with the course of construction.
On one hand, for small, do-it-yourself projects, your existing home insurance coverage could be adequate. However, if you’re making major structural changes, you may need to acquire a builder’s risk policy or course of construction policy. This gives you coverage for damage that occurs during construction, such as from hazards like weather, fire or theft.
If you use a licensed, bonded, and insured contractor, then they should carry the appropriate builder’s risk insurance. But you should verify that they have what you need with your own insurance agent. For do-it-yourself projects, you’ll need to get any extra insurance on your own.
What Do You Do After Construction?
After you finish your remodeling project, keep photos of the work and all receipts to support any future insurance claims. If you haven’t already, notify your home insurance company about the improvements you’ve made in case you need to make any adjustments to your policy.