Remodeling & home insurance: Check your policy before you start

Mon Jan 22 2024

Happy woman lays on floor with her home remodel plans, paint samples, and tools

If you’re planning to give your home a facelift, you want to make sure you’ve got adequate homeowners insurance during construction. Here’s a rundown of what you’ll need, insurance-wise, to make sure you and your property are adequately protected during the renovation process.

Do I need home renovation insurance?

Home renovation insurance isn’t a specific product, but depending on how you’re tackling the project, you may need to do three things to your home insurance:

  1. Update the coverage limit of your policy overall. If the renovation includes an addition or upgraded appliances, you may need to increase the dwelling and personal property coverage limits to ensure that you have enough protection for the new version of your home.

  2. Update your medical expenses coverage limit. Is your renovation a DIY project with help from family members or friends who don’t live in your home? Then you may want to talk to your agent about increasing the limit of the medical expenses part of your policy. This portion of your policy covers medical bills for injuries that happen on your property to people other than you and your family.

  3. Ensure you have adequate personal property coverage. Things can break during construction. Worse? Sometimes your personal items disappear. Make sure you have adequate personal property insurance for items like furniture, appliances, electronics, and clothing.

A quick call with your agent should let you know whether you need to make any changes.

Renovation projects that can impact home insurance

Any renovation projects you take on that can materially affect the value of your home can have a real impact on your home insurance. Some examples include:

  • Installing a swimming pool.

  • Getting a new roof.

  • Altering or replacing your HVAC system.

  • Updating your kitchen.

  • Redoing bathrooms.

  • Adding a porch or deck.

  • Replacing windows.

Some of these projects can actually help lower your home insurance premium. For instance, a new roof or updated plumbing often reduce your costs because they can improve the resiliency and safety of your home. 

You should note, too, that hese aren’t the only projects that can impact your homeowner policy. Be sure to check with an agent before undertaking any major projects to see if policy changes are required.

Does homeowners insurance cover new additions?

Homeowners insurance is designed to get your home back to the condition it was in before you experienced a loss, so claim payouts usually don’t help with new additions. More importantly, an addition means more square footage. The extra size can make you underinsured, which is why it’s so important to call your insurance agent before you start remodeling.

Other remodeling insurance policies

In addition to potentially boosting your basic homeowners insurance, there are two other policies you may need to know about when renovating your house. The first policy is often called builder’s risk insurance. Coverage can vary, but builder’s risk policies protect the project in progress. For example, a builder’s risk policy may cover losses related to stolen materials, vandalism, or fire damage to the materials or equipment on your property.

Essentially, builder’s risk insurance protects people with an insurable interest, or financial stake, in your renovation. That describes both you and your contractor because:

  • Your contractor wants to protect their equipment and any interest they have in the materials.

  • You want to protect your house and the addition as it’s being built in case there’s a storm or theft.

  • Both of you want to protect any work that’s been completed. If a fire burns down a half-completed renovation, for example, a builder’s risk policy can help cover the costs of redoing the work and replacing materials.

Note: The contractor typically buys this coverage, but some cities may require you to get it before you get a building permit.

The second type of insurance you’ll want to make sure your contractor has is general liability insurance. This is a kind of commercial insurance that business owners get to protect them from lawsuits over property damage and bodily injury.

Let’s say, for instance, you believe your contractor is responsible for an injury you suffered, so you sue. The contractor’s general liability policy would likely cover the contractor’s legal costs.

In other words, a contractor with insurance is a much better financial risk for you than one who isn’t insured. So, if you plan to hire a contractor, be sure to get proof of insurance first. Verify that this insurance is active and will be active for the duration of your renovation. 

Contractor credential checklist

Insurance is critical when you’re doing renovations, but it’s not the only thing. In fact, without confirming some other details, insurance may not cover you if something happens. So, in addition to confirming that they have insurance, here are some other things to check on before hiring a contractor:

  • Are you licensed? A license ensures the contractor knows the appropriate codes and processes to safely and effectively work on your home. Confirm your contractor’s license number with your state’s license board.

  • Are your subcontractors insured? Everyone working on the project should have insurance to safeguard you against financial loss.

  • Can you provide a list of previous clients? A reputable contractor is usually happy to share their references.

Project-specific questions to ask your contractor

Separate from a contractor’s background, licensing, and insurance, you should ask logistical questions about the project. For example, you may want to ask: 

  • Do you have photos of similar finished work? Most skilled contractors are proud to show proof of past projects.

  • How many other projects do you work on at the same time? This will give you insight into whether they will be responsive to your needs and adhere to the project timeline.

  • Will you pull permits? Contractors may wish to avoid getting permits for smaller projects, but a permit ensures they are able to comply with local building codes. It’s important for their safety and your security.

When in doubt, call your insurance provider

No two homes are alike, and no two renovation projects are, either. If you’re not sure how your insurance will need to be adjusted for a remodeling project, reach out to your insurance provider to see what it recommends.


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