How Your Home Renovation Projects Can Affect Your Insurance Policy

How Your Home Renovation Projects Can Affect Your Insurance Policy

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Fixing up your real estate can help boost your home value when you sell, but don’t do anything before you call your insurance agent first!

Home renovation projects can affect your homeowners insurance. Some alterations will increase your premium, while others may help you get a discount.

Without telling your agent, you run the risk of going over your insurance policy limits if your home value changes too much. So, you need to set a budget and have a plan of action.

Done right, home renovation can lower your homeowners insurance and give you a better home. Read on to find out which types of projects will affect your insurance policy.

Home Expansions

Sometimes you just need more space, but bigger homes require larger insurance coverage. When you expand your home, its replacement value will increase. This means higher insurance premiums.

Replacement value represents the cost to repair or rebuild your home in case of a disaster. So, a bigger home will need more money. Expansions that add to your replacement value include a larger garage and a second bedroom.

Most insurance policies already have clauses for this. A typical policy will require your house coverage to be at least 80% of the replacement value.

Depending on the type of expansion, you might not need to change your coverage. You might need a four-point inspection to determine that.

If you need a four-point inspection to obtain new insurance or renew your existing policy, check out FSG Inspections.

Fixing or Redoing the Roof

Damage from wind, rain, snow, and hail are a big insurance drain. That is why redoing your roof might help you qualify for an insurance discount.

Insurance agencies offer up to 20% discounts on insurance premiums for getting a new roof. With a new roof in place, your home is less likely to get damage from the elements, which makes it safer for the insurance company.

If you like in a state that has frequent hurricanes, you might qualify for an even bigger discount. However, in order to qualify for that discount, you will need to discuss it first with your insurance agent.

Replacing or redoing your roof will help you lower your premiums, but at the same time it will increase your home value. Higher value means higher premiums, so you might have to balance those two out.

Nonetheless, a newer roof is always a good investment as it also increases the quality of life for the people living under it.

Building a Pool

While most landscaping projects will not affect your insurance policy, building a new pool will. A pool will increase both your real estate value and associated risk.

Unless your current policy covers you for a pool, you will need to update your policy with increased liability coverage.

There is always the chance for an accident by the pool, and your insurance provider will need to adjust your policy accordingly. If someone gets hurt in your pool, they might sue for bodily injury and your insurance will have to kick in.

Building a Deck

Adding a deck works much like adding a pool. It will increase your real estate value, but will also increase associated risk.

Simply put, people might fall off your new deck and they might sue you for liabilities. Your insurance provider will increase your policy premiums to account for that risk.

If you are building your new deck above ground, it will affect your home value more, which in turn will increase your coverage.

Home Business

If you plan to work from home, you might have to include your new occupation to your homeowners insurance.

Most policies insure home businesses up to a certain amount. If you plan on installing a large office or a dedicated storeroom, you might have to update your policy to cover their entire value.

Some home businesses that will affect your insurance policy include:

  • Home piano lessons
  • Massage sessions
  • Yoga classes
  • Storage for online sales
  • Work-from-home writer’s office

Kitchen and Bathroom Renovation

The kitchen is the most risk-prone spot in any home. It is also where homeowners spend a lot of money on equipment.

Upgrading your kitchen can boost the value of your home while reducing associated risk. If you get new appliances your home value will increase, which will also increase your coverage. At the same time, if you install safety features, and upgrade plumbing and wiring, you may qualify for a discount.

A newer kitchen is safer against fire and flood, so you will have to balance out the lower risk with the higher value in your new policy.

Upgrading your bathroom works much like with your kitchen. It increases value while reducing risk, both of which affect your insurance coverage.


Finally, if you plan on flood-proofing or expanding your basement, you will need to update your insurance coverage. The very act of altering your basement carries some risk, so you have to notify your insurance provider.

In areas where floods are a frequent occurrence, installing a sump pump or any other anti-flood measure might qualify you for a discount. Since your policies do not include coverage against flood, you will have to add that too.

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