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Are you getting ready for your next home renovation project?
Home renovations are a great way to build the home of your dreams and increase your property value.
In all the excitement and stress of the project, it can be easy to forget that you’ll also need to update your insurance.
Whether you’re doing it yourself or bringing in professionals, there are 3 Reasons to Update Your Insurance Policy After Home Renovations.
Your Insurance Claim Won’t Pay for Unreported Renovations
If you experience property loss due to fire, flood, or a wind storm, your home insurance policy will help you repair the damage and replace what you’ve lost.
However, when you renovate, you run the risk of leaving yourself underinsured.
If you replace old construction materials, appliances, and fixtures, you may need to adjust your coverage to make sure your policy covers the new materials.
Your policy won’t account for renovations unless you update it.
When your insurer doesn’t offer enough coverage, you’re left paying out of your own pocket to rebuild your home.
If you believe your insurance policy should cover more than the insurer offers, you may want to talk to an insurance lawyer.
There are cases where the insurance company undervalues the property or replacement costs.
Underinsurance Could Invalidate Your Whole Policy
Insurers typically use what’s known as the “80 percent rule,” where they will only pay out on an insurance claim if the policy covers at least 80 percent of the replacement value of the home and your property.
It sets out a minimum standard of coverage so that homeowners cannot willfully underinsure their property, hoping they only ever need to make smaller claims that won’t reach their policy limits.
If you are already underinsured, expensive renovations can risk pushing you beyond the 80 percent rule.
Look out for renovations that could dramatically change the value of your home, such as:
- Expanding your space with an addition or a granny suite
- Adding a large deck or a pool
- Upgrading your kitchen or bathroom, especially new appliances
It’s not just the renovations themselves that you need to have covered.
Neglecting to update your insurance could jeopardize coverage for your whole property.
Some Renovations Lower Your Premiums
Many people avoid adjusting their insurance policy because they don’t want their premiums to go up.
However, this isn’t always the case. Some renovations can actually save you money because they reduce the risk of property loss.
These include renovations like:
- Building a new roof
- Installing a home security system
- Installing a sump pump and other flood protection measures
Updating your insurance policy may feel like a pain, but should anything happen, you need to be sure your policy is current.
Get in touch with your insurance broker or provider and make sure your policy accurately covers your home.
