When to Get Coverage for Renovations and Refurbishments

Undertaking renovations and refurbishments can be an exciting yet challenging endeavor, whether you’re a homeowner seeking to enhance your property’s value or a business aiming to modernize its facilities.

While the focus is often on design, materials, and execution, it’s equally critical to consider the timing of securing proper insurance coverage for the project. Navigating the complexities of insurance during renovations isn’t just about compliance; it’s about protecting your investment, ensuring the safety of workers, and shielding yourself from potential liabilities.

Without adequate coverage, you run the risk of financial losses due to accidental damages, delays, or unforeseen circumstances that could disrupt the entire project. In this section, we will guide you through the crucial stages at which to obtain insurance for renovations and refurbishments. Understanding when to get coverage is key to safeguarding the success of your project and achieving peace of mind throughout its duration.

The Growing Trend of Home Renovation

In recent times, the trend of home renovations has been on the rise. Various elements, such as fluctuating housing market conditions, changing interest rates, and the shift towards working from home, have encouraged homeowners to remodel their homes rather than relocating.

Let’s look at some renovation statistics:

  • In 2022, homeowners spent an average of $22,000 on home renovations.
  • Kitchens and bathrooms were the most popular renovation spaces, with homeowners investing around $20,000 on kitchen renovations and $13,500 on primary bathroom upgrades.
  • Over 61% of homeowners who undertook renovation projects plan to stay in their homes for another decade or more.

These statistics echo the fact that homeowners see long-term value in investing in their homes.

Note: Get a free quote to see if you can save on your renovation insurance.

How Does Renovation Impact Home Insurance?

While minor cosmetic changes, such as painting or changing light fixtures, won’t typically affect your home insurance, more substantial renovations can. It’s essential to inform your insurance provider about any major renovations, as these can increase your home’s value and may not be covered by your standard policy.

For instance, remodeling a kitchen or bathroom, replacing vinyl flooring with tile, or upgrading countertops can add significant value to your home. Your standard home insurance policy might not cover these improvements as it is based on the replacement cost at the time you procured the policy.

Key Point: Informing your insurance provider about the renovations you’re undertaking can protect you. If your renovated kitchen was to catch fire, for example, your insurance coverage would pay to rebuild it. However, if you hadn’t informed your provider about the renovations, the coverage might not be sufficient to cover the improvements.

Therefore, before you begin any work on your home, it’s good practice to check with your insurance provider. If you’re undertaking extensive work, your insurance company might recommend additional coverage, often referred to as ‘builder’s risk’ coverage.

What Exactly is Renovation Insurance?

Renovation insurance, a newer trend in insurance coverage, is typically added as an endorsement to your homeowner’s policy or as a separate builder’s risk policy. The goal is to ensure that your home improvement project is covered during the construction phase. Some insurance policies may exclude or limit coverage for renovations that the insurer isn’t aware of. Therefore, it’s crucial to ensure your insurance policy has the correct replacement cost value, including your renovations.

The contractor handling your home improvement project should also have insurance coverage. Accidents can occur, especially when working with machinery on a construction site. It’s important to verify the insurance coverage of anyone working on your project.

Even if you’re doing the work yourself, it’s vital to notify your agent. Damage, injuries, and replacement of stolen or vandalized materials can be costly. If you decide to do the renovations yourself, you’ll want to ensure that your home coverage will apply, as some carriers require the work to be done by licensed contractors.

Insurance Coverage for Unoccupied Homes

If your renovation project forces you to move out temporarily, ensure to inform your insurance provider. Many homeowners insurance policies have ‘vacant home’ exclusions, which can limit the number of consecutive days a home can be covered when unoccupied. Homes left empty can become easy targets for burglars, making this communication essential.

If you’re considering moving out during the renovation process, especially for a month or more, ensure your home insurance policy covers your home during this period.

Will Renovation Increase My Homeowners Insurance Premium?

The impact of renovation on your home insurance premium can be complex. Generally, if you’re investing in your home through renovation, the value of your home will increase, and this might raise the cost of rebuilding your home, potentially increasing your premium.

However, if your renovation includes installing more fire-resistant features, upgrading old electrical wiring, or replacing an old roof, these changes can lower your risk and potentially save you money on your insurance policy. Therefore, depending on the nature of your renovation, your premium might increase, decrease, or remain the same.

The Bottom Line

Navigating the complexities of insurance for renovations and refurbishments doesn’t have to be a daunting experience. By understanding when to secure coverage and what types of policies are essential for your specific project, you are taking proactive steps to mitigate risks and safeguard your investment. Insurance is not just a box to be checked off but an integral part of your overall project planning. It provides a safety net that allows you the freedom to focus on the creative and logistical aspects of your renovation, knowing that you are protected against unforeseen challenges.

Whether you’re a homeowner looking to increase property value or a business aiming to modernize facilities, timely and adequate insurance coverage is key to ensuring the success and smooth execution of your project. So, as you finalize your renovation plans, make sure to also outline your insurance strategy. This small but crucial step can make all the difference in achieving a renovation that is both successful and secure.

Keep in mind that savings vary based on a consumer’s profile and other factors. Contact your insurance agent for more information. If you’re unsure where to start, consider speaking to an expert agent today