Before you start a home renovation, it's important to understand how it will impact your home insurance coverage — both during and after the work. Here are some of the things you should check.
Will A Renovation Increase Your Home Insurance Rates?
It's possible that a renovation will increase your home insurance rates. Remember, your rates are based in part on how much it would cost to rebuild your home after a disaster. If you improve your home, those costs will likely go up. Even if you restore your home to its new condition, your rates could still go up if your policy covers depreciated rather than new value.
Further, some renovations will likely have a larger impact than others. Remodeling your bathroom doesn't change your home as much as adding a room or finishing your basement.
You can request quotes for the changes before you start the project. That way, you can plan your budget accordingly.
Will A Renovation Disqualify You From Home Insurance Coverage?
You can typically continue under your current home insurance policy, but there are a couple of things to keep in mind. If you do work without required permits, or work that's not up to building codes, your insurance company may no longer be willing to insure your home until you make it legal. In addition, if you want to do something abnormal, like adding a rooftop pool on a single-family home, you might not be able to continue under a standard home insurance policy. Instead, you would need to find an insurer willing to create a customized policy.
Will You Be Covered During Work?
You need to talk to your insurance company about how you'll be covered during work. Your home insurance policy will typically still cover your structure and contents, but you may need special coverage during major renovations that change the exterior structure of your home.
This delineation comes down to risk. Your home isn't really at more risk of weather or other external disasters during a kitchen cabinet replacement. But if you take out an exterior wall, a windstorm could cause a lot more damage. You should also ask about what would happen if your contractors — or anyone else helping you — get hurt. It's a good idea to ensure hired contractors carry their own insurance. But this step should be in addition to making sure you have the right home insurance in place.
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