Are Your Home Upgrades Compatible with Your Insurance Policy?
If you’re thinking about upgrading your home with new features or by adding some extra square feet, you need to consider how these changes will affect your insurance policy. You’re probably eager to make some changes to increase the value of your home, or to make your home more attractive. During the planning stage, it’s important to talk to your insurance provider to see if theses changes are covered under your current policy.
How big is too big?
If you’re planning on doing some major renovations to your home such as adding a new room to the ground floor or dramatically changing the structure of the building, you will need what is called builder’s risk insurance. Most homeowner’s insurance policies do not cover remodeling projects that exceed $50K. When it comes to costly renovations, talk to your insurance provider about what additional forms of insurance may be required.
If you’re adding value, check your limits.
Before construction begins, you need to think about how much value you’re planning to add to your home. A new bedroom or a new patio could add tens of thousands of dollars to your property. Follow up with your insurance company to see if these new additions will be covered by your current policy. A homeowner’s insurance policy comes with a limit that designates the value of the property. If you go over that limit, your new additions won’t be covered by your existing policy.
How should your current policy change?
If you find out that your renovations will exceed the limit on your homeowner’s insurance policy, you can raise the limit and pay a higher premium. You can also raise the limit gradually as the project reaches completion to avoid a surge in premiums all at once. If your project will take up the better part of a year, you can save money by raising your limit in stages.
Is your contractor insured?
If your contractor gets injured while working on your property, you could face a messy lawsuit. Make sure that you obtain a copy of your contractor’s liability insurance policy. Some insurance companies require you to use an insured contractor.
Document every step of the process.
It’s important to stay on top of the details of your home improvement project. Your insurance company may ask to see documentation of the changes including receipts, a copy of your contractor’s insurance policy, as well as any permits. Keep your documents organized just in case you need them after the renovations are finished.
Don’t forget about builder’s risk policy.
You can protect yourself during the construction process by signing up for builder’s risk insurance, a particular type of insurance that protects your property from damage during the rebuilding process. Construction of any kind usually means added risk. A construction site could easily catch fire from an electrical mishap or some of your materials may get damaged if they’re not properly covered. Builder’s risk insurance protects your assets from new hazards that might not be covered by your homeowner’s insurance policy.
Contact Summit Insurance for more information about how your home improvement project will affect your current policy.