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How Do Renovations Affect Your Home Insurance Policy?

18 December 2012

Your home needs some work done to it. You’ve already hired your contractor and lined up your home renovation financing. But what about your home insurance policy? Have you notified the insurance company and told them about your plans for your home? If not, you should, as completing home renovations can have some major impacts on your home insurance.

Increasing the value of your home
One of the best things about home renovations is that they can increase the value of your home. But it’s also because of this that you need to let your home insurer know about the renovations. Remember that your home insurance is there to replace the cost of your home should anything happen to it. If your home is going to cost more to replace after you make the renovations and up its value, your home insurer needs to know about it. Also be sure to keep receipts of any work done, as the insurer may also want to see these.

Moving out to move up
You may be completing the renovations to upgrade your home and move on up on the great ladder of life. But wait. Are you going to need to move out first in order to do it? Some major renovations, such as taking off an entire roof and replacing it, requires that the homeowner vacate the premises while the work is being done, for their own safety. But leaving the home for an extended period of time can also affect your insurance policy. Insurance companies prefer that you stay in your home, as this way they’ll be less susceptible to things such as a break-in; and if something goes wrong in the house (such as a fire,) they know someone will know about and do something about it right away. If you need to leave your home for renovations let your insurance company know and ask if you need a vacancy permit. These may have a slight cost attached to them; but you’ll know your home’s covered even if you’re not in it.

It’s what’s inside that counts
Of course you want to protect the exterior of your home, and this is what your insurance policy is for. But that same policy typically also covers the contents of your home, as well as the actual structure; and it’s these contents you also have to think about when undergoing home renovations. If you’re going to be ripping walls out to build an addition, or any other major work that will essentially leave a portion of your home, and the stuff within it, open to the elements and other issues, you need to let your insurance company know about it. They may choose to drop contents from your insurance policy for the time the work is being done.

Insuring injuries
Any contractor that you hire to complete the reno work should have Worker’s Compensation for anybody working on your home. This will protect them in case any of those workers get hurt while working on your home. However, don’t leave it up to the contractor! Call your insurance company, find out if you can add liability insurance to your coverage for the period of time when work is being done. It can save you more than you know in the end.

Revealing reno problems
Renovations are typically meant to make your home better and expose a side of it that until now, has only lived in your imagination. But renos can reveal more than just your inner designer – they can also reveal huge problems with the home. Galvanized plumbing, rotting floorboards, and other problems can often all be seen once the home renovation spotlight is shining on them. And if your contractor comes across these things during the reno, it’s going to be a big problem – and one that takes much more time and much more money to complete. This can vastly change the scope of your renovation project; and that can affect your insurance coverage.

You may not want to speak to your home insurance company before making renovations. You may even be worried that your premium is going to go up, or that they won’t let you do the work. While there’s no need to worry that you’ll be restricted from doing the work (it is your home after all,) yes, your insurance rates may go up, even if only temporarily.

Rest assured though, that even rising rates can protect you from bigger things in the end – such as finding out when it’s too late that you’ve inadvertently voided your home insurance policy, or that it no longer applies to your home because of the drastic changes you’ve made.

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