Supply and affordability challenges in today’s housing market have made renovations extremely popular. There are many details to consider during the remodeling process. However, there is one detail that many people overlook. That is the impact on insurance.
A typical homeowner’s insurance policy indemnifies the owner for covered losses that occur during the normal course of owning and occupying the home. Once the home is in a construction zone, general insurance coverage is limited and any loss in the process can cause financial and emotional grief to the owner.
When renovating your home, it’s easy to get caught up in the design choices and construction details, but it’s important not to overlook the insurance implications. Here are some important considerations to keep in mind.
1. Notify your insurance company
Early notification: Contact your insurance company before starting any major renovations. This will maintain the validity of your insurance policy and cover any issues that may arise during the renovation process.
Scope of work: Provide detailed information about the scope of the renovation. This helps insurance companies understand the increased risk and adjust insurance policies accordingly. This is also an opportunity to explain any limitations of coverage during construction.
2. Review coverage limitations and exclusions
Policy limitations: Make sure your current insurance limits are sufficient for the increased value of your home after renovations. An increase in home value usually requires coverage renewal.
Exclusions and limitations: Please note any exclusions related to construction or renovation work. Some policies may have special exclusions for damages incurred during renovations or may limit coverage for certain types of work.
3. Consider builder risk insurance
Professional content: For major renovations, you may need builder’s risk insurance (also known as construction work insurance). This insurance covers damage to the property during the renovation period and often provides broader coverage than standard homeowners insurance. The largest loss that occurs during construction, the theft of materials used during construction, is typically covered by builder’s risk insurance.
4. Understand vacancy clauses
Occupancy status: If renovations make your home uninhabitable, check your insurance policy for vacancy clauses. Many insurance policies have limits on coverage if your home is unoccupied for an extended period of time.
5. Protect your property and liability
Property protection: Make sure your insurance provides sufficient coverage for potential damage to your property, whether it’s due to accidental damage during construction or other unforeseen events.
Responsibility: Make sure you have sufficient liability coverage in the event of an incident involving your contractors or site visitors.
6. Document everything
Before and after photos: We will record in detail the condition of the property before and after renovation. This will be helpful if you need to file a claim related to renovations.
7. Consult an insurance advisor
Expert advice: This is your first bullet point, but be sure to discuss your remodeling plans with your insurance advisor to ensure that all aspects of your insurance policy are covered. We can provide guidance on coverage adjustments and additional insurance needs.
By addressing these insurance considerations, you can focus on the excitement of remodeling while protecting your investment and avoiding unexpected setbacks.
