In today’s challenging housing market, many homeowners are choosing to remodel their homes due to supply and affordability issues. While remodeling can be an exciting venture, it’s essential to consider various details, including the often-overlooked insurance implications.
Standard homeowners insurance typically covers losses that occur during everyday living. However, once your home turns into a construction site, your coverage may have limitations, potentially leading to financial and emotional distress if something goes wrong during the renovation.
As you dive into remodeling, it’s easy to get caught up in design and construction details. However, you must not ignore the insurance aspects. Here are some important points to consider:
Notify Your Insurance Company
Early Notification: Contact your insurance company before starting any significant renovations. This step ensures your policy remains valid and protects you from potential issues that might arise during the renovation.
Scope of Work: Provide detailed information about the renovation’s extent. This helps the insurer assess any increased risks and adjust your policy accordingly. It also allows them to explain any coverage limitations during construction.
Review Coverage Limits and Exclusions
Policy Limits: Ensure your current policy limits cover the increased value of your home after renovations. Typically, a higher home value requires an update in coverage limits.
Exclusions and Limitations: Be aware of any exclusions related to construction work. Some policies might exclude damage occurring during renovations or limit coverage for specific types of work.
Consider Builder’s Risk Insurance
Specialized Coverage: For extensive remodels, consider builder’s risk insurance, also known as course of construction insurance. This policy covers damage to the property during renovations and often provides broader coverage than a standard homeowners policy. It typically covers theft of construction materials, a common issue during remodeling.
Understand Vacancy Clauses
Occupancy Status: If renovations require you to vacate the home, check your policy’s vacancy clause. Many policies restrict coverage if the home is unoccupied for an extended period.
Protect Your Property and Liability
Property Protection: Ensure your policy offers adequate coverage for potential property damage, whether from construction accidents or other unforeseen events.
Liability Coverage: Confirm that your liability coverage is sufficient in case of accidents involving contractors or visitors to the site.
Document Everything
Before and After Photos: Keep detailed records of the property’s condition before and after the renovation. This documentation can be invaluable if you need to file a claim related to the renovation.
Consult with Your Insurance Advisor
Expert Advice: Although this should be one of your first steps, discuss your remodeling plans with your insurance advisor. They can help ensure all policy aspects are addressed and provide guidance on adjusting your coverage and any additional insurance needs.
By considering these insurance issues, you can enjoy the remodeling process while protecting your investment and avoiding unexpected setbacks.
