Homeowners with plans to renovate or remodel their home need to arrange their financing, select a contractor, and make several critical decorating decisions. However, there is one crucial thing they end up leaving out of their plans that is answering the question, “Will your insurance premiums increase due to home renovations?”
To avoid having your insurance premiums increase, you need to protect your home before your home renovation project begins.
If you wait to contact your insurance company to inform them that you want to renovate your home, you will have to deal with a lot of hassle. For instance, you damage or destroy a part of your newly renovated home, you will have no choice, but to pay the costs of repairing or rebuilding the damaged section of your house.
Even then, it is important to know that making structural changes or modifications to your house can cause your premiums to go up, as it can change your home insurance coverage. Even though most homeowners make renovations to their house to increase its value, it also leaves them susceptible to losses. However, some upgrades they make to their house can have a favorable effect on your homeowners insurance, resulting in lower insurance premiums.
For this reason, you need to contact your insurance company to communicate your plans to them before you execute them, and they just may give you discounts and more coverage.
The Insurance Company’s Definition of Renovation
The definition of renovation differs from insurance company to insurance company. Generally, most insurance companies define renovation as altering the structure of your home, adding a garage, completing your basement, or updating the exterior of your home.
By contacting your insurance company beforehand, your insurance company will tell you of any limitations and restrictions they have in place in the instance a homeowner wants to renovate their home. Since most insurance companies require you to have another type of coverage if you have to leave your home for 30 days or more, you need to inform them or else, they will void your coverage.
Prior to contacting your insurance company, you need to know some of the common types of home renovations that can cause your home insurance premiums to fluctuate.
1. The Addition of a New Roof
The addition of a new roof on your home can save you a lot of money. It can reduce your home insurance premiums. You need a sturdy and durable roof, as it is one of the most, if not the most vulnerable part of your home.
Snow, hail, wind, and rain all can damage your roof and cause damage to the structure of your home. If you reside in an area prone to extreme weather, you can possibly receive bigger discounts. You should also consider taking other measures such as investing in premium quality shingles or waterproofing your roof.
If you’d like learn more about ways to save more on your home insurance please check out our: How To Save Money on Your Home Insurance in Connecticut
2. The Addition of a Swimming Pool
You may want to think twice before you install a swimming pool in your backyard. Your family will love the idea of a swimming pool, but your insurance company may not be too ecstatic about it. Most home insurance policies come with personal liability protection to cover the medical expenses of a person who sustained an injury in your swimming pool.
Your insurance company may ask you to increase your liability coverage, thus causing your home insurance premiums to increase. If your swimming pool has a diving board, you may need even more personal liability coverage, as most insurance companies consider them to be a hazard. If you have installed a hot tub in your backyard, again, the premiums will increase. However, you can reduce the premiums by adding locks and covers.
3. The Addition of a Personal Office
If you plan to start working from home, you may plan to build a personal office in your home. In that case, you need to ask your insurance company to extend coverage to your home office. Even though most home insurance companies offer coverage for business based at home, but not by a lot.
Once you inform your insurance company about starting your business from home and what type of business it is, your insurance company may advise you to increase your home insurance coverage. This would again lead to an increase in your insurance premiums.
This will only be the case if your home-based business requires equipment or supplies and attracts foot traffic, meaning customers visit your home, but if it’s the opposite, you may not have to adjust your home insurance premiums.
For more information about insuring your home-based business, please check out our: The Ultimate Guide to Insuring Your Home-Based Business.
4. The Addition of a Living Room or Kitchen
If you plan to add or expand your living room or kitchen, talk to your insurance company first. Most likely, your insurance company will make changes to your home insurance coverage to accommodate the changes in the floorplan of your home. If you are building another room on your property with plans to rent it out, you need to get landlord coverage. Your premiums will increase if you add an additional room or expand your existing space.
What you should never do is give a fraudulent description of your home to your insurance company to obtain lower premiums.
In the event your insurance company finds out that you presented your multi-family home as a single-family home, they will cancel your home insurance coverage. Additionally, you should also not make an excessive number of claims over the lifespan of your home insurance coverage.
First of all, it is rare for homeowners to submit a claim and if they submit too many, your insurance company may start viewing you as a risk and proceed to cancel your homeowner’s coverage. However, you can submit a claim if someone burglarizes your home, it catches on fire, or a natural disaster such as a hurricane destroys your home.
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