When planning a renovation project for your home, it’s essential to understand how it might affect your homeowners insurance. While your policy typically covers minor updates like painting or replacing carpet, more significant projects such as adding a room, upgrading a kitchen or bathroom, or installing a pool may require you to update your coverage to ensure you’re fully protected.

Before you dive into any renovation or expansion project, it’s important to review your homeowners policy and speak with your insurance provider about the potential impacts on your coverage.

How Renovations Affect Home Value and Insurance Coverage

Renovations often increase the overall value of your home, which may directly impact the amount of dwelling coverage you need. Whether you’re adding square footage or upgrading existing spaces, these improvements can raise the cost to rebuild or repair your home in the event of a covered loss.

If you plan to undertake a major renovation, it’s crucial to consult your insurance company or agent to ensure your policy reflects the increased value of your home.

What Does Homeowners Insurance Cover?

A typical homeowners insurance policy protects your home and personal property from damage due to unforeseen events like fire, windstorms, hail, or lightning. Most policies include dwelling coverage, which helps pay for the cost of repairing or rebuilding your home if it’s damaged by a covered event.

In addition to your home, many policies also cover other structures on your property, such as garages, sheds, and fences. Additional coverages might include loss of use (for temporary housing if your home is uninhabitable) and personal liability protection.

How Renovations Affect Your Homeowners Insurance Policy

Before starting any renovation, it’s important to understand what your policy covers. While many homeowners insurance policies provide some protection during renovations, it’s always a good idea to discuss your project with your agent to ensure you have the right coverage in place.

If you plan to hire a contractor, verify that they carry the necessary insurance, such as liability coverage, workers’ compensation, and property damage insurance, in case of an accident or damage to your home. If you’re tackling the renovation yourself with the help of family or friends, make sure your liability coverage is sufficient for any potential accidents.

Understanding Dwelling Coverage and Renovations

Dwelling coverage is designed to cover the cost of repairing or rebuilding your home if it’s damaged by a covered loss. This coverage is usually based on an estimate of the cost to rebuild your home.

If your renovation increases the value of your home, such as remodeling your kitchen or adding a room, the cost to rebuild your home may rise as well. If this happens, your current dwelling coverage may no longer be sufficient. Be sure to inform your insurance provider about your home improvements so they can adjust your coverage to reflect the new value.

Keep in mind that while your home’s market value may fluctuate, the cost to rebuild could be higher than you expect due to factors like rising labor and material costs over time.

Additional Coverage to Consider

Aside from dwelling coverage, it’s important to review your liability coverage, especially if your renovation project involves additional workers or visitors on your property. For example, if you’re hiring subcontractors, confirm that they carry their own insurance. If you plan on adding new furniture, electronics, or appliances to your newly renovated space, you may need to increase your personal property coverage to ensure these items are fully protected.

Final Thoughts

Before embarking on any home renovation, it’s vital to speak with your insurance agent or company to ensure your coverage aligns with your plans. By understanding the impact of your renovation on your homeowners insurance policy, you can help protect your home and possessions from potential risks.

Reach out to your local insurance agent or provider today to get a home insurance quote and discuss the coverage you’ll need for your upcoming renovation project.

Products offered by Midwest Heritage Insurance Services are not insured by FDIC or any other Federal Government Agency, are not a deposit or obligation of, or guaranteed by Midwest Heritage, may involve investment risks, including possible loss of principal amount invested, and may lose value.