Home improvements are a great way to transform your home into the one you have always dreamed about. They can improve the value of your home and help you avoid expensive or unwanted moves. Renovations help you adapt your home to your new life circumstances, whether it is building an extension to make room for a new addition to your family or adding accessibility features as you get older and want to age in the home you love.
However, you should be aware that home improvements could have implications for your home insurance policy. When you change the value of your home, you may need to update your insurance policy to make sure you have appropriate coverage.
Neglecting to tell your home insurance company about renovations can even lead to home insurance claims getting denied. Policies cover specific amounts, so changes can require adjustments or else you may find yourself underinsured.
But not all home renovations can wind up costing you more in insurance premiums. Some can result in lower payments, especially if they make your home more resilient against fire and flooding risks.
These are some of the most common home renovations and how they impact your insurance.
#1 New Kitchen
A perennial favorite, new kitchens can also be quite costly, and contacting your insurance provider about them is a must.
You are likely adding new cabinets, new flooring, new appliances, new fixtures, and more. Kitchens quickly become the heart of a home, so it is worth investing in a kitchen you love.
However, kitchens are also one of the rooms most at risk of fire, smoke, and water damage. You want to make sure your policy reflects your new kitchen so you have the funds to replace everything that gets damaged.
#2 Upgrades to Wiring and Plumbing
When you buy an older home, upgrading the wiring or plumbing can be an essential task. While these can be disruptive and expensive renovations, the good news is that they often result in a reduction in insurance premiums.
Outdated wiring and old plumbing are huge risk factors for fire and water damage. Modernizing these systems reduces your risks, so you can wind up paying lower premiums.
Certain types of wiring and plumbing can even make it a challenge to find insurance at all. Knob and tube pose significantly higher risks than modern systems, while lead and polybutylene can also make it difficult to get affordable insurance.
#3 Expanding Your Home
Adding new space will have a direct impact on your insurance costs. When you add an extension or an ADU, you are directly adding to the cost to replace your home should it be damaged in a fire.
When you add square footage to your home, not only should you inform your insurer about the renovations, but you may also want to consider talking to your insurer about a policy that will protect your home during renovations.
With extensive work being done on your home, the risks of damage are higher. You may want to talk to your insurer about adjusting liability insurance in case a worker gets injured. You can also get policies that cover construction materials.
