Renovating your home can change the appearance of your home dramatically. Not only is that a significant investment of time and money, but it's also something that could impact your insurance. Here's what you need to know.
Home Renovations Tend to Increase the Value of Your Property
You could end up with a significant gap in your coverage if you don't update your insurance company. Your insurance company may raise your premiums, but they'll also calculate your renovations into your coverage. If your home does burn down (or is stricken by another type of disaster), you'll get reimbursed for the house as it is now, rather than the house it was before its renovation.
Don't forget that your home's value can go up by more than just the cost of your renovation. Your home could go up in value in general, because it's now more desirable. Ask your real estate agent about your home's projected market value.
You May Need Additional Insurance
There are insurance packages specifically designed for construction. If a major amount of construction is occurring around your home, additional insurance will protect you from disaster. If items are stolen from the work site, someone gets injured on the work site, or the work site itself gets damaged, your additional insurance can kick in.
You Could Introduce a Danger
What are you renovating in your home? If you're adding a privacy fence, that decreases your risk: you're less likely to be broken into. Consequently, your insurance rates could change. On the other hand, if you're adding a pool, that means your risk has gone up. Pools can be dangerous for both children and adults, and can serve as an attractive nuisance. Either way, your insurance company will need to consider this, and you may need additional liability coverage.
Someone Could Get Hurt
Insurance is necessary if someone gets hurt while you're working on your home. For instance, someone could come in and immediately trip on debris from a home remodeling project. Home insurance comes with policies designed to protect yourself from people who are injured on your property.
Home insurance tends to be a fairly complex topic. Not only does it cover a lot of issues, but what isn't covered isn't always immediately obvious. If you're going to renovate your home, you should find out whether you might run into any problems with your homeowners insurance. There's a chance that your rates could be lowered, rather than increased. Either way, it's a general best practice to notify your home insurance when you're renovating.
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