Homeowners remain notorious for always working on home improvement projects. It could be turning an empty basement into the ultimate home theater and recreation room, or it might be adding an outdoor living room and swimming pool to the backyard. On the other hand, you may simply be remodeling the kitchen or adding an extra bedroom onto the house. Regardless of the scope and cost of your home renovation project, it’s important to remember that any project will affect your homeowners insurance. Therefore, there are certain steps you should take to protect your home throughout the renovation process.
Talk to your homeowners insurance agent before you start.
Starting a home renovation project is very exciting. According to the 2020 U.S. Houzz & Home Study: Renovation Trends, 54 percent of homeowners worked on a renovation project in 2019 that included three interior rooms on average. The median renovation expenditure for these projects was $13,000.
However, it’s important to wait to start until after you speak to your homeowners insurance agent. “You want to be sure that you have all of the necessary insurance coverages during and after the renovation,” says Scott Holeman, media relations director for the Insurance Information Institute. “Ask if you will need to update your homeowners insurance and whether you need other types of insurance to protect you financially during the project.”
Even if you are doing it yourself or enlisting the help of family or friends, you still may need some additional insurance coverage for any potential mishaps. “If you are planning a simple, do-it-yourself project, only take it on if you are qualified to do the work,” Holeman says. Otherwise, you could face big problems if things don’t turn out as you hoped.
If friends or family are going to help, it’s imperative you have sufficient liability protection if someone gets hurt. “This includes raising the amount of no-fault medical protection on your home insurance policy so that if someone is injured he or she can simply submit the doctor’s bills to your insurance company,” Holeman says. “This can lessen the risk of being sued.”
If you decide to hire a contractor to complete your home renovation, you may need to get a builder’s risk policy in tandem with your homeowners insurance policy. “It may be available as a standalone policy or as an add-on to your homeowners policy,” Holeman says. “This coverage generally protects a home from damage incurred during construction, including wind and rain, theft of materials such as carpeting tile or wood, and vandalism.” Keep in mind this does not cover the theft of the contractor’s equipment.
Make sure your contractor is insured.
When looking for a contractor, it’s important to find a reputable contractor that carries his or her own insurance. “The contractor should have both a commercial business/general liability insurance policy and workers compensation,” Holeman says. “It is important that the workers remodeling your home be adequately insured so that if a worker is injured he or she does not sue you. If the contractor is not adequately insured or is unwilling to verify their insurance coverage, consider hiring someone else.”
The contractor also should carry his or her own insurance to protect all the work equipment from damage or theft. Most likely, your homeowners insurance policy will not cover any claims for these types of losses.
Document your home renovation project.
Throughout your home renovation project, it’s important to record what’s happening and keep track of all related paperwork. “Take photographs before, during and after the renovation so that you have a visual record of all the work done on your home,” Holeman says. “Keep copies of any contractor contracts and receipts for work done and materials purchased.”
You also want to keep your homeowners insurance agent or company updated on the improvements to your home. “After a major renovation, you may need to increase the amount of insurance you have to rebuild your home,” Holeman says. “Be prepared to forward all records and receipts to your insurance company so that they can accurately assess your insurance needs.”
Be prepared to expand your insurance coverage.
Certain home renovation and improvement projects may require additional insurance coverage to address their specific risks. “If you added a swimming pool or hot tub, consider getting more liability protection as they are considered ‘attractive nuisances,’ and could leave you vulnerable to lawsuits,” Holeman says. “Talk to your insurer about whether an umbrella liability policy is a cost-effective way to increase your overall liability protection.”
Because many home improvement projects include upgrading appliances and/or technology as well as adding more space that now includes new furniture and furnishings, you also may need to increase your homeowners insurance coverage related to replacing your personal property. Speak to your insurance agent or company to find out if you need to adjust your coverage. As with the renovation itself, be prepared to submit receipts for your purchases to help your agent accurately assess your insurance needs.
Too long, didn’t read?
While starting a home renovation is exciting, it’s important to speak with your homeowners insurance agent or company before you start any project to ensure you have the proper coverage for and after the project. In addition, you need to make sure your contractor carries his or her own business/liability and workers compensation insurance. Finally, make sure you document the entire project from start to finish, including photographing the project and collecting all your contracts and receipts.