Standard Practice
Some want to make upgrades to make their house look more pleasant. Also, some are just doing it to fix their house to make them look new. You must follow all the necessary steps to ensure that there will be no future problems. Today, we will talk about home renovation.
So to the question, do you need to notify your home insurance company for the upgrade for home renovation? The answer is YES! Before making any house changes, you must contact your insurance agent, company representative, or broker. You should have all the coverage you need during and after the renovation. Because if you make the renovation before consulting it, you may end up underinsured if something terrible happens because of the upgrade.
Processes and Procedures
To better understand the process and steps to follow, here are things that you need to keep in mind:
Talk to all the important people that can protect your asset
Your insurance agent, broker, or company representative can help you with changes like this. Hence, always let them know your plans, like renovations. It is because they are the ones who will tell you if you need other types of insurance for your policy to protect you financially during and after the renovation process.
For a massive upgrade, you should get a builder’s risk policy
Or course of action policy added to your account
Some insurance companies have this as an add-on, and some offer it as a stand-alone. The ‘’ course of action ‘’ policy can protect your home from damage during construction and renovation. It covers damages from rain, wind, and theft of materials like wood, tiles, cement, and mirrors. However, anything stolen that doesn’t belong to you is not covered. For example, renovation equipment owned by contractors or workers. Also, vandalism is not part of the insurance policy.
Ask for a copy of the contractor’s insurance policy.
The renovations’ contractor must have an insurance policy, worker’s compensation, and commercial business/general liability insurance. Here are the reasons why an accident is inevitable during the renovation process. If any workers obtain injuries while doing the upgrade in your house, they must be part of the insurance so that you can avoid lawsuits. If the contractor cannot provide any copy of the insurance policy, look for a new contractor to avoid unnecessary problems.
Add Vacant Home Insurance to your policy.
Renovations can be massive or small, depending on your goal. You can have that change for small renovations like an additional bathtub while still living in your home. But for significant renovations like changing the overall ceiling and flooring, an extension of the living room and dining room, and any other significant changes, living temporarily in a different house is a must. Therefore, you should purchase vacant home insurance. This will protect your house in case of damage while you are away.
You can also make Do-It-Yourself renovations.
Many homeowners are into DIY, especially nowadays. You can search for everything now online. You can easily follow a quick step-by-step online tutorial on Youtube. That is why most homeowners do it themselves instead of paying a contractor. Especially if the upgrade is just a minor change. So if you happen to be one of these owners who prefer to DIY, you need to ensure enough liability coverage in case an accident happens during the renovation process.
For example, you ask your brother and his friends to help renovate your kitchen countertop. Unfortunately, your brother’s friend got injured by a hammer during the renovation process. If you have sufficient liability coverage, the medical bills of the injured will be covered. And if worse comes to worst that he files a lawsuit against you, that will also be covered.
Make detailed documentation of the upgrade.
Documenting the renovation is vital to ensure that you will be able to calculate the total amount used. You must keep the receipts for the whole job. As well as the materials’ receipts and the contractors’ contracts. Also, taking pictures of each item and keeping them together with the receipts is advisable.
Update Your Insurance Coverage
Once the renovation is done, make sure that you will update your insurance coverage as soon as possible. This is because the value of your house will go up after the changes. The amount needed to rebuild your house from the ground in case of a total loss claim is now higher than the initial amount you insured. Therefore, be prepared with all the information needed to add coverage to your policy, like receipts to your insurance company, records, and lists that can help calculate the new value that must be added to your insurance.
Consider adding more Liability Protection.
If your house’s renovation includes adding a new swimming pool, jacuzzi, hot tub, or playground, you must consider adding more liability protection to your home insurance. These are considered attractive nuisances and can cause you a lawsuit if things go south during parties or just when you have some visitors. You may think you don’t need additional coverage since you have never encountered an accident before during parties. But these accident-prone attractions can cause you trouble, and being underinsured is the last thing you surely want to happen.
Additional coverage for your Personal Possessions is a must.
The renovation includes a lot of buying from left to right. A new look to your living room will not be completed without a central piece of decor like paintings, jars, furs, or chandeliers. So if you buy more expensive stuff in your house after the renovation, additional coverage for your personal possessions is necessary. It is best to consult your insurance agent to give you the best option, like adding an endorsement or floater that will serve as an individual policy for over-the-top items and can provide much higher insurance coverage to ensure your expensive stuff.
Construction Material Coverage and Foundation Collapse Coverage
Consider adding these to your policy before the renovation takes place. We can never know when an accident can happen. Hence, it is always best to be prepared for anything wrong. Construction materials coverage protects any materials you have purchased, whether they are just on their way to your house or already there on your property. For example, if the materials got damaged while transported to your house, that will be covered. Also, if the materials were stolen while stored inside your property, that should be covered too by your policy.
On the other hand, the foundation collapse coverage protects against sudden damage during construction. Let’s say you want to renovate your living room, but during the process, the whole wall collapses suddenly. This kind of incident will be covered if this policy is added to your home insurance before the renovation starts.
Ask your insurance agent about discounts for Home Insurance intended for Home Renovation.
Having some renovations in your house can also save you money if you get qualified for discounts due to the changes that you made. For example, you added safety features in your houses, such as smoke detectors, deadbolt locks, and fire and burglar alarms. Some companies cut their customer’s premiums as much as 15-20% if proven that these safety measures are added to your house after the renovation. Moreover, if you upgraded your electrical,
plumbing, or heating system, your insurance company may lessen your premiums because these changes can reduce the risk of water damage or fire.
A new roof can also give you more discounts than you think. Yes, renovating a new roof may not sound exciting, but you can get some extra cash, especially in hurricane-prone and hail-prone areas. Although most insurance companies cover roofs, some insurers have depreciation schedules based on the roof’s age. This is for them to determine how much protection you should be getting. And just like any other insurance rule, the newer the roof, the higher the amount your insured will give you to replace it.
Business and home combined.
Nowadays, more and more businesses are closing due to the pandemic. That is why many business owners are looking for options to keep their source of income and stay safe at the same time. That being said, having your business in your home can be a good idea. Generally, homeowners policy protects equipment for home-based businesses for up to $2,500. But that amount may not cover businesses that use big machinery, equipment, and bulks of supplies stored in your home. You need an additional business policy to insure these items for these businesses.
Call us today about Home Insurance for Home Renovation!
To know more about what insurance best fits your needs, contact us, and don’t forget to sign up for our free RCE evaluation! Team AIS in Denver, CO, will provide the information you need to ensure your investment’s safety.