A remodeling project comes with more paperwork than you'd think. Here's what to know to make the home insurance inspection and permit processes easier.
Are you remodeling your home?
If you're planning a home renovation, you might be considering skipping the permit process. Illegal construction is no new phenomenon, but it could end up costing you more than you had planned.
Additionally, your lack of permits may come under fire when it's time for inspection. It's important to make sure you have all the required paperwork when you plan a remodel.
Maybe you have never remodeled a home before. The project will come with more paperwork than you might think.
Here's what you need to know to make the home insurance inspection and permit processes flow more smoothly. We know you want to do things on the cheap, but don't get caught without a permit.
This is not the place to cheap out.
In This Post:
- Why Do You Need a Home Insurance Inspection?
- What Permits Do I Need and Why?
- Renovations Should Be Exciting
Why Do You Need a Home Insurance Inspection?
When you move into a house, you will need to have the home inspected. You may even be asked to have an inspection if you decide to make any changes to your home.
There are a few reasons insurance companies require these inspections. Insurance carriers have a lot to lose when they insure a home.
They need to make sure that they are covered along with you.
They will perform an inspection to check for any potential hazards. This could be a roof in need of repair or exposed wiring.
They will also check to make sure any of these existing hazards can be repaired. You may be asked to make the repairs within a given time frame.
The primary goal of the inspection will be to determine the rebuilding cost of your home. The replacement estimate is determined using a variety of factors.
These include public information and information you provide.
Scope of the Inspection
Due to the online nature of today's world, you may be able to provide photos of your home to be evaluated by your insurance provider. Previously, the home inspector would do this.
Your insurance provider hires an independent insurance appraisal company. They will contact you to arrange an in-person inspection.
You will need to be home for the inspection. The inspector will do a quick walk-through of your home, and they may ask to see each individual room, the basement, and the furnace.
They could ask you questions regarding the age of the roof, electrical work, plumbing, furnace, and more. The inspector will also measure your property to ensure all property tax information is correct.
If you have a dog, expect to answer any questions regarding your dog's temperament and behavior.
It may seem like a hassle, but the property insurance inspection will make sure your home is properly insured. It may even help you keep the cost of your insurance to a minimum.
The report will be sent to the insurance company, and it will be reviewed by an insurance underwriter. They will determine whether or not the information on your policy is correct.
The underwriter will contact you with any changes or concerns regarding your policy. You may wish to do more research and find more info on the inspection process.
Following the inspection, you may be asked to make certain repairs. These will be any outstanding hazards that will put your home at risk.
This is ultimately a benefit to you and the insurance company.
You may not realize that you have faulty wiring that could ignite at any moment. This could save you from a devastating loss in the future.
When an insurance company makes a recommendation for repair, it is not really optional. It becomes a requirement of your contract with the provider.
Some recommendations may not be mandatory, but you should make the clarification with your provider.
What Happens If You Fail to Comply?
If you fail to comply with an insurance company's demands, you could face cancellation.
Usually, you will be at risk of not being renewed, and your policy will be canceled on the expiry date.
If the condition is serious enough, your policy may be canceled mid-term. This means your policy will be canceled before the expiry date.
These situations are serious, and you will receive proper notification before cancellation. Don't avoid these notifications.
If an insurance company cancels your policy, this could damage your future ability to be insured. Believe it or not, you have an insurance score.
Think of it as though you had defaulted on a loan. You wouldn't expect to get approved for another.
What Permits Do I Need and Why?
When you plan a renovation, you will likely need to pull permits. You cannot expect that you will get away with foregoing the permit process.
It may seem like a good way to save money, but it could cost you much more in the long run.
Not all renovations will require a permit. This will depend on your county's or municipality's building codes and regulations.
Before you begin a project, check with your local municipality to find out whether or not you need a permit. Changes to your home may also affect your insurance costs. Check with your provider and let them know of any changes you plan on making.
What if You Don't Get the Project Permitted?
Some local governments place serious consequences on an illegal building. You may be asked to stop building and pay hefty fines.
This could set your project back in terms of both time and money. The project could end up costing you much more than you had budgeted.
The contractor may face fines for building without a permit as well. You should be wary of contractors who are willing to build without a permit.
Often, these contractors are unlicensed or cutting corners. Either way, both are dangerous prospects.
You could end up with a renovation that becomes a serious safety hazard.
Contact your local government to find out which projects need permits and how you can obtain one. Acquiring a permit will cost you a fee, but it will be worth it.
When you apply for a permit, the governing body will overlook your plans. This will give you extra insight into your project. They may be able to help you fix any errors or hazards.
What Kinds of Projects Require a Permit?
Each region has its own building codes based on potential hazards. For example, all buildings in California must be able to withstand an earthquake.
Each municipality regulates building codes differently. There are no rules as to which projects will require a permit.
For example, some municipalities will require a permit for a fence, regardless of characteristics. Some will require a permit only if the fence is a certain height.
Updating electrical or plumbing systems will generally require a permit. These projects may also have a positive impact on your insurance premiums.
If you plan on changing the blueprints of your home, such as adding a room, you can expect to need a permit. These types of projects will typically alter the structure of the home, which needs to be supervised.
This will hold true for additional windows or doors.
Some municipalities place monetary thresholds on projects. Regardless of the type of project, you may need to acquire a permit if the cost exceeds a certain amount.
Before you begin any project, check with your local government. Even if you don't need a permit, it is best to be sure.
This will save you time and money down the road.
Trying to Sell a Home Without Proper Permits
If you make any unpermitted renovations to a home, these may get caught later on. You may think that you can sell a home without disclosing this information.
While you may be right on some level, you cannot expect to get away with it. You are playing with fire, so to speak.
In most states, you must disclose information about anything that may impact the home's value or desirability.
The insurance company may discover unpermitted updates if future damages occur. The new owners may not be covered for these damages.
When the insurance company won't cover the costs of repairs, the new owners may turn to you.
You could end up wrapped up in an unwanted lawsuit.
Make Sure You Follow Permit Laws
The laws regarding permits are designed to make sure buildings are up to code. Find out which projects require a permit, and use a licensed contractor.
Some people may be curious about what's going on at your home. To avoid any unwanted interactions, consider posting copies of all necessary permits on the outside of your home for them to see.
Otherwise, you could end up with an unwanted visit from your local government.
Renovations Should Be Exciting
When you make any change or addition to your home, the process should be as exciting and stress-free as possible. It may seem like a nuisance to have to go through the inspection and permit processes, but you will be thankful in the end.
The home insurance inspection is meant to ensure all of the information on your insurance policy is correct and up-to-date.
Make sure you follow all necessary rules and regulations to avoid future trouble.
If you are planning a renovation, you can get a free catalog here. You deserve to live in a home that is fashionable and functional.