Little is nicer than coming home to a house you love. To this end, people spend hundreds if not thousands of dollars every year renovating their homes. Some renovations are for practical purposes to meet your family’s changing needs, and some simply update your home, giving it a fresh, modern, stylish look.
Whatever are the reasons for your renovation, you must consider your insurance before making any changes. Having the correct insurance will protect you if something goes wrong during the upgrades and also in the long run after the renovations are complete.
Renovations Could Increase the Cost to Replace the Home if Damaged
Often, renovations increase the amount it will cost to rebuild a home or part of the house that has been destroyed or damaged. So your insurance will need to be adjusted to accommodate this.
For instance, your home was insured for X amount but your kitchen was old and outdated. Then you renovated it, replacing it with new cabinets made of better quality materials, expensive flooring, and state-of-the-art appliances. You would need to inform your insurance provider of these upgrades. If you don’t and your kitchen burns down, you’ll only be covered for the original value of the old kitchen.
Apart from replacing old with new, if you build anything extra into your home like a deck or shed or extend your home, this increases the square footage, which will cost more to build than it would without these additions.
Adding luxury features like a pool, hot tub, wine cellar, or movie theater must also be communicated to your insurance provider.
What Homeowners Insurance Covers
Homeowners insurance can vary in terms of precisely what it covers. Make sure your policy matches your needs.
Homeowners’ insurance will not cover damages or losses caused by poor work. So if you’re attempting a DIY project and it goes wrong, your insurance will not compensate you.
On the whole, though, homeowners insurance will cover:
Damage to the House
If your house has been damaged or entirely destroyed by a fire, lightning, hurricane, or vandalism, your insurance will pay you to fix what was damaged or rebuild the house up to the standard it was insured.
Some homeowners insurance will not cover some natural disasters, like floods. If you live in an area where a certain type of natural disaster, such as a hurricane, is common, make sure your insurance covers it. After a hurricane, your roof is often damaged. It is important to note that your home insurance policy covers roof insurance claims to avoid having to pay for repairs out of pocket.
Depending on the kind of cover you have, your insurance will compensate you for 50-70% of the value of your home. If your home needs repairing or has to be rebuilt, you’ll need to pay for the balance of the costs.
Damage to the Contents of the House
Your homeowner’s insurance will also cover the contents of your house, including items like furniture, appliances, and clothes. This way, you’re protected if there has been a fire or if your home was burglarized and you’re a victim of theft.
It’s imperative to let your insurance company know if you have upgraded any major appliances or furniture because if you don’t and it gets damaged, the insurance will only compensate you for the value of the old appliance or furniture.
Personal liability insurance isn’t mandatory for homeowners. However, when you buy homeowners insurance, you’ll likely get personal liability cover.
This insurance protects you if someone else is injured in your home or if you, your children, or your pets hurt someone. So, if someone slips on a stair in your home or your dog bites someone, your liability insurance will pay for their medical bills if they sue you.
Insurance You Need During the Renovation Process
Depending on the kind of renovations or upgrades, it is worth taking out extra cover. It may not be necessary if you’re fixing a few cabinets and doing other quick and simple tasks. Still, getting additional coverage is a good idea if you’re doing major renovations. The types of cover you may need include:
Extra Personal Liability
If you’re planning on doing the renovations yourself and getting friends or family to help, you must have additional personal liability. Accidents happen, and a simple exercise of painting your walls can end in disaster if someone falls off a ladder.
Since DIY projects can be risky, the extra coverage will protect you if someone gets hurt while helping you.
Vacant Home Insurance
Homeowners insurance will not pay out if your home is damaged while it’s vacant. If you’re doing major renovations and plan on staying somewhere else for more than 30 days while the house is being renovated, you’ll need to get Vacant Home Coverage.
This type of insurance also protects you when you only notice the damage a while after it occurred. Read the terms of your policy, so you know how much time you have to submit a claim.
Dwelling Under Construction Insurance
Building materials and tools are expensive, and they can get damaged. Dwelling under construction cover will compensate you if your building material or tools are stolen or damaged, whether at your home or while being transported.
Often, it’s easier to hire a professional to do your home renovations. But before allowing anyone to work on your home, you must ensure they have the right insurance.
Whether you hire a building company or an individual contractor or handyman, they should have the following:
- Property insurance
- Liability insurance
- Workers compensation
If the contractor cannot show you that they have insurance, it is safer to go with someone who does.