Planning a home renovation involves fun activities such as designing a new floor plan and picking paint colors. However, while having a conversation with your insurance agent is essential, it is often forgotten. Home renovations can increase your home’s value, making your current home insurance coverage inadequate and leaving you vulnerable to losses. Other improvements can help you qualify for lower premiums. Below are five home renovations that could potentially affect your home insurance policy.
1. Getting a New Roof
Installing a new roof can save you money. With a new roof, you do not have to worry about expensive roof repairs or leaks. In addition to the above savings, a new roof can help cut your home insurance costs by 10 to 20 percent. The roof is the single most significant factor that can affect your policy. Most insurance companies will offer a significant discount if you use stronger roofing materials that are leak, hail, and wind resistant. Before installing a new roof, consult your insurance agent so that they can explain whether you qualify for a discount. A new roof could also increase your property value, meaning that you may need more coverage.
2. Building a Pool
Building a pool might make your home popular in the summer, but it also makes it the riskiest on the block. When people are having fun and running around the pool, there is a chance of an accident occurring. If a person does get hurt, they could hold you responsible for any damages. This risk increases your need for personal liability protection, and as such, your insurance premium will drastically increase after installing a pool. Some insurers will ask you to install a self-locking fence around the pool to reduce risk and, accordingly, the cost of insuring the pool. Your homeowners insurance coverage amount will also increase to compensate for the value of the pool.
3. Expanding the Living Space
As your family grows, your home needs to grow with it. You can add living space by either finishing the basement or converting the garage into a livable space. Building a new addition, such as adding a second-story bedroom or expanding the living room, increases the square footage of your home’s livable space. Hence, your insurance must be altered to account for the value of the new space. If you plan on renting out the new space, you will also need landlord coverage.
4. Renovating the Kitchen and Bathroom
Most homeowners will start with the kitchen and bathroom when they want to upgrade their home, making their kitchen into a chef’s dream and their bathroom into a spa. What some homeowners may not realize is that these upgrades increase their home’s value. If you install high-quality countertops, new appliances, and new flooring, ensure that your insurance coverage is revised accordingly so you have sufficient coverage in case of an accident. You can also ask your insurance agent if you qualify for a discount if you have upgraded the plumbing and electrical wiring. These upgrades reduce the chance of flooding and fires, hence reducing your premium.
5. Adding a Deck
A deck can be the social hub of your home, especially in summer, but having one installed can also affect your insurance policy. Adding a deck can increase your home’s value, and it can also increase risk, especially if it is attached to the second story. Therefore, you should have your insurance policy revised after adding a deck, to reflect the increase to your property value and to ensure that it sufficiently covers potential losses in case of an accident. When your property value goes up, so must your coverage, meaning that you have to pay higher premiums.
If you are considering having some work done on your home, talk to your insurance agent first to help you understand how the renovations might affect your insurance policy. Your agent will help you make the most of your discounts while still ensuring that your home is adequately insured.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.