Home renovation projects that increase your home’s value, such as a kitchen remodel or sunroom addition, may also increase your coverage needs and raise your homeowners insurance costs. In contrast, improvements that make your home safer and lower your risk of fire, wind, or water damage can potentially lower your cost of coverage. And other updates like replacing an old roof, upgrading electrical systems, or installing a security system are the most likely to deliver an immediate return on investment — each one can earn you home insurance discounts.
How renovations to lower home insurance work
Home insurance companies base your premiums (the amount you pay for coverage) on how likely your home is to have a claim. Renovations that reduce the risk of fire, theft, water damage, or storm damage can help lower your premiums.
Not every renovation lowers insurance costs, though. Cosmetic upgrades like kitchen remodels or luxury finishes can raise your replacement cost — the amount it would take to rebuild your home after a disaster — which may increase how much you pay for coverage.
To qualify for discounts or rate reductions, insurers often ask for proof that your home is safer. One way to do that is through inspections. A wind mitigation inspection checks for features that protect your home from storm damage, like roof upgrades or storm shutters. And a four-point inspection confirms the condition of four major systems: the roof, plumbing, electrical, and HVAC.
Top home improvements to lower insurance
Not all home improvements affect your premium equally. Upgrades that meaningfully lower your risk of filing a claim tend to earn the most substantial discounts.
Roof replacement and reinforcement
Older roofs are more likely to leak or sustain storm damage, so insurers usually charge more to account for the higher claim risk. But if you replace your roof with newer, stronger roofing materials, you’ll typically qualify for cheaper rates and a roof replacement insurance discount.
Impact-resistant shingles are built to handle hail, flying debris, and strong winds better than standard asphalt shingles. Class 4 shingles have the highest impact ratings. Secondary water-resistant barriers add an extra waterproof layer beneath the roof system to help prevent leaks if shingles are damaged during hurricanes and strong winds.
In hurricane-prone areas, insurers also consider roof-to-wall attachments as renovations to lower home insurance claim risks and costs. These metal clips or straps help secure the roof to the home’s walls, making it harder for strong winds to lift the roof during severe weather.
Updating electrical and plumbing systems
Modern electrical and plumbing systems lower the risk of fires, burst pipes, and water damage claims. Older systems, such as knob-and-tube wiring or polybutylene pipes, are more likely to fail, increasing insurance risk.
One way to lower cost through electrical and plumbing renovations is to upgrade to newer materials like PEX plumbing or copper wiring. PEX plumbing is more flexible and resistant to corrosion, leaks, and temperature fluctuations. Updated copper wiring can also reduce fire hazards because it’s corrosion-resistant and less likely to overheat compared to older electrical materials.
Installing smart home security and monitoring
Many insurers offer insurance savings for smart home devices and services that help prevent theft, fire, or water damage. This can include burglar alarms, smoke detectors, fire alarms, and professionally monitored security systems.
Water leak detectors are especially valuable because they can catch small leaks before they become expensive claims. Some systems, like automatic shut-off valves, can even turn off the water if they detect unusual water flow or a burst pipe.
Renovations that might increase your premium
Not every home improvement lowers insurance costs. Renovations that add square footage, custom features, or high-end materials can raise your home’s replacement cost, which in turn increases your premium.
Some projects can also increase liability risk. Insurance companies often consider structures like swimming pools or trampolines “attractive nuisances” because they raise the chance of injuries and lawsuits.
Before starting a major renovation or adding a fun feature to your property, ask your insurer how the project could affect your coverage and rates. A safety-focused upgrade may qualify for discounts, but a large addition or luxury remodel could increase your premium more than expected.
Home improvement insurance savings comparison
Insurance savings from home renovations can vary based on where you live, your insurance company, and the age and condition of your home. In general, upgrades that lower your risk of expensive claims tend to offer the biggest savings.
|
Renovation type |
Primary risk reduced |
Potential savings impact |
|
New roof |
Storm damage, roof leaks, and hail damage |
High |
|
Impact-resistant windows |
Wind damage, broken glass, and break-ins |
Moderate to High |
|
Smart security system |
Theft, smoke, and fire damage |
Low to Moderate |
|
Upgraded electrical |
Electrical fires and system failures |
Moderate |
|
Water shut-off valve |
Burst pipes and major water damage |
Moderate |
How to ensure you get your discount
Even if you complete a claim-reducing renovation, your insurance company may not automatically apply a discount. Taking a few extra steps can help ensure you get your rate reduction.
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Talk to your insurance agent before starting the renovation to ask which upgrades qualify for discounts.
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Hire licensed and insured contractors so the work meets local building codes and insurer requirements.
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Save all receipts, invoices, permits, and contractor agreements as proof of the upgrades.
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Schedule an inspection after the work is completed, especially for roof, electrical, plumbing, or wind mitigation upgrades.
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Send inspection reports, photos, or other proof of completion to your insurance company so it can review your policy coverage and apply any applicable discounts.
Frequently asked questions
Do I need to tell my insurance company if I renovate?
Yes. Renovations can change your home’s replacement cost, which is the amount it would take to rebuild your home after a covered loss. Notifying your insurance company can ensure you have enough coverage to avoid being underinsured. Your insurer can also check for discounts you may now qualify for, like for installing an impact-resistant roof.
What renovation gives the biggest insurance discount?
A roof replacement usually provides the largest insurance discount, especially in areas with severe weather and hurricanes. Wind mitigation upgrades, such as hurricane straps, storm shutters, and secondary water barriers, can also lead to significant savings by reducing the risk of costly storm claims.
Does a new HVAC system lower home insurance?
A new HVAC system may offer a slight reduction in home insurance premiums because modern systems are less likely to cause fires, electrical problems, or water damage from leaks. But the savings are usually smaller than adding a new roof or other storm-protection upgrades, like hurricane straps or storm shutters.
Can smart home devices really lower my premium?
Yes. Many insurance companies offer smart home discounts for devices that lower the risk of fire, theft, or water damage. Centrally-monitored security systems, water-leak detection systems, and automatic shut-off valves are the most likely upgrades to qualify for lower premiums.
