Homeowners’ insurance helps pay for repairs after a fire, theft or other covered loss. But failing to update your home insurance may result in having inadequate coverage to protect your newly renovated home. It’s important to understand the effect home renovations, remodels, additions and upgrades may have on your homeowners’ insurance and to notify your insurance agent of any increases in your home’s value.
Coronavirus Pandemic Boosts Numbers of Home Renovations
Quarantined at home for months during the Covid-19 pandemic, many homeowners made the decision to renovate their homes, upgrade outdated décor, or create more space with an addition to their home. In fact, according to a recent Forbes.com article,
“More than half (54%) of homeowners say they made improvements to their properties since the pandemic started.” (1)
A Boston Globe article from March of this year, cited the most popular home renovations as turning basements into play spaces for homebound children, unused space into home offices for remote working parents, upgrades to air-quality systems, improvements to energy efficiency systems, and even recreational space upgrades such as installing home gyms or golf putting greens.(2) Now that restrictions have begun to be lifted, homeowners have said they will continue to update their homes,
“more than 70% of homeowners said they will continue to invest in their homes with the same level of interest.” (1)
Making changes to your home is exciting. You may begin by browsing websites or using Pinterest to gather ideas. You set a budget for your project, ask for references and secure a contractor and may even apply for permits. One aspect of the process of doing home renovations or additions that many homeowners overlook is contacting their insurance agent. It’s important to understand the impact renovations, additions and remodeling has on the value of your home and also on your homeowners’ insurance.
Home Renovations & Your Homeowners’ Insurance
Many homeowners are unaware of how renovations and additions could impact their home values and homeowners’ insurance. Standard homeowners’ insurance protects your home from damage due to theft, fire, lightening, and more. A typical homeowners’ policy helps with costs to rebuild and to replace your belongings. When you purchase home insurance, your insurance agent works with you to determine the proper level of coverage. Your homeowners’ insurance limits should be high enough to cover the cost of rebuilding your home; including the cost of building materials, and construction costs. Most homeowners’ insurance policies also provide enough coverage to replace your belongings at 50-70% of the insurance on your home.
As you make changes, upgrades, and additions to your home, the value of your home increases. Not notifying your agent of any additions or renovations, may mean your homeowners’ insurance won’t cover the cost of rebuilding. It could also mean you’re no longer insured to the full value of your home. For example, if you purchase a home with a basic kitchen, formica counters, builder grade cabinets, and linoleum floors. After a few years, you renovate adding hardwood floors, custom cabinets, marble countertops, a Viking range, and Sub-Zero refrigerator. The replacement value of that kitchen is now much higher than the base model the house was insured for. Similarly, adding a screened in porch, converting floors to hard wood, adding central AC, or renovating a bathroom, could increase the value and the money needed to rebuild after a covered loss.
When Should I Notify My Agent of Any Upgrades, Renovations or Additions?
It’s a good idea to call and notify your Account Manger before starting any additions or renovations. Your insurance agent will run a replacement cost estimate to determine if you’ll need to increase your coverage limits.
Most likely small updates such as removing wallpaper and painting walls, won’t increase the value of your home or require insurance changes. But it can’t hurt to contact your insurance agent about changes that may increase the cost to rebuild your home if it becomes damaged.
You’re better safe than sorry if something unexpected like a house fire occurs and you need to submit an insurance claim to help repair damage.
Let Our Team Help Protect Your Biggest Asset
our home is much more than property, it’s where memories are made. With over fifty years of protecting homeowners from Braintree to Boston, from Marshfield throughout the South Shore of Massachusetts and beyond, our dedicated Account Managers partner with you to safeguard what matters most. Our team knows the right questions to ask to determine your specific risk profile and will recommend coverages based on your unique needs. We represent more top-rated insurance carriers than most agencies our size, allowing us to offer the best selection of coverage at exceptional value.
McSweeney & Ricci provides home insurance, car insurance, renters insurance, private client services, business insurance and more to thousands of clients throughout New England. When it comes to insurance it’s difficult to know what you need. It’s more than offering comprehensive coverage at a great price. We advise clients on the proper levels of insurance for their specific needs while providing the extraordinary service they deserve.
If you’re planning a renovation, remodel or addition to your home, give us a call at (844) 501-1359 or submit an inquiry on our website. We’d love to hear about the exciting changes you’re making and will make sure you’re protected!
Sources:
1) https://www.forbes.com/advisor/homeowners-insurance/renovations/
