Homeowners may choose to renovate their homes for various reasons, such as creating more living space or updating the design. However, it’s important to consider how these renovations can potentially impact your home insurance policy. In some cases, renovations may increase your insurance rates, while in others, they may actually save you money. Bankrate’s insurance editorial team has explored how popular home renovations can impact your insurance rates, and we’ll discuss some of the key findings below.
Certain renovations can increase the value of your home but also drive up the cost of your insurance. For example, building a swimming pool can be seen as an “attractive nuisance” that increases your liability risk, leading to higher premiums. To offset this risk, insurance agents may recommend higher liability coverage or the purchase of an umbrella insurance policy for additional protection. Additionally, safety measures like a locking fence or safety cover may be required, further increasing the cost of installing a pool.
Adding an office for a home business can also affect your insurance rates. While it can increase your home’s value, it may require you to purchase additional coverage for business-related assets and equipment. Depending on your insurance provider, you may have options like increasing the limit on business property included in your homeowners policy, purchasing a separate businessowners policy, or obtaining in-home business insurance. It’s important to discuss your business risk with your agent to ensure proper coverage.
Building an extension to accommodate an expanding family or adding new square footage to your home will likely increase your insurance premium. You’ll need higher dwelling coverage to account for the value of the additional space, and you may also need to consider other types of coverage for the newly built areas. It’s advisable to consult with your insurance agent or company before starting any floor plan renovations to determine if adjustments to your policy are necessary.
Upgrading your kitchen or bathroom can add value to your home but may require an increase in dwelling coverage. If the existing coverage is not enough to rebuild with the upgraded materials, it’s important to consider increasing the coverage to align with the improvements. This will ensure that you’re not left with out-of-pocket expenses in case of a covered loss. Your insurance agent can help determine the right level of coverage using the property insurance company’s home valuation tool.
On the other hand, certain renovations can actually lower your insurance rates. Renovating or replacing your roof with newer or stronger material can lead to a reduction in premiums, especially if the new roof has special loss-mitigation measures. Upgrading wiring or plumbing systems, particularly if they’re outdated or no longer up to code, can also qualify for insurance discounts. These upgrades reduce the risk of fires, electrical damage, and water damage, resulting in potentially lower insurance premiums.
In conclusion, it’s crucial for homeowners to consider the impacts of renovations on their home insurance policies. While some renovations may increase rates due to higher liability risks or the need for increased coverage, others can lead to lower rates by improving safety measures. It’s important to discuss these changes with your insurance agent to ensure you have the right coverage for your renovated home.
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