Top 10 Ways Your Home Improvement Project Can Affect Your Home Insurance

by Ryan HanleyFebruary 14, 2017

Are you planning a remodel, addition or expansion of your current home? If so, you’ll want to think about how your home improvement project will affect your insurance.

Homeowners are completing more home improvement, maintenance and repair projects than ever before. The HomeAdvisor 2016 True Cost Report indicated that the number of homeowners that finished two home maintenance and repair projects increased nearly 12 percent between February 2015 and February 2016. In addition, the report showed the number of homeowners who spent more than $1,000 on home improvement projects rose between 2015 and 2016.
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A home improvement project can deliver immediate and long-lasting benefits for homeowners, but failure to consider how this endeavor may impact your insurance can be problematic.

To prevent any issues from arising, familiarize yourself with the many ways a home improvement project can impact your home insurance, including:

Home Replacement Cost

If you file a homeowners claim, your insurer will determine if you have been properly insuring your home to its replacement value. If you haven’t, it could mean a reduction in the claim payment. After a home improvement project is finished, the cost to replace your home may rise, and you’ll need to ensure that the right coverage limits are in place to protect your property.

Adjust the replacement cost of your house associated with your home insurance coverage after a home improvement project is completed — you’ll be glad you did. By doing so, you’ll be able to safeguard your property against damage or destruction and guarantee that you’ll be covered for the full replacement cost of your residence.

Extent of Renovations

Depending on the size and duration of a home improvement project, you may want to purchase a builders risk policy that protects your home during new or renovation construction.

Homeowners usually need to purchase builders risk coverage for 100 percent of possible construction costs. Builders risk insurance offers protection for your home throughout new construction, along with coverage for the materials and equipment that are used throughout a construction project. Furthermore, builders risk coverage protects homeowners against damage due to severe weather and other unforeseen risks.

Builders risk insurance may prove to be a valuable investment, and discussing all of your options with an insurance agent before you begin a home improvement project is key. That way, you can guarantee that you are fully protected throughout construction.

“Attractive Nuisance”

Unfortunately, a construction site sometimes can become an “attractive nuisance” that garners plenty of attention from kids and adults alike. If you fail to account for various hazards associated with your home improvement project, you may put others at risk.

Attractive nuisances commonly cause home insurance rates to rise. They create potential liability hazards, so you’ll want to do everything possible to eliminate these dangers immediately.

Remember, homeowners can be held responsible for harm caused by conditions that are both attractive and dangerous as a home improvement project progresses. If you dedicate the necessary time and resources to minimize attractive nuisances on your property, you can limit your risk.

Protection of Personal Items

When a home improvement project is underway, how do you intend to protect personal items inside your house? To make sure your personal items are safe and secure, speak with your insurance agent about the insurance coverage you’ll need while your personal property may be stored elsewhere during a home improvement project (such as a temporary residence or in storage).

On-the-Job Injuries

If a worker is injured during a home improvement project, your home insurance policy should protect you. A home insurance policy typically provides limited coverage for personal injuries that occur on your property. This policy often delivers a minimum of $100,000 of coverage per incident. You may need to increase your home insurance coverage limits based on your home improvement project and the number of workers on site.

Loss Problems

Weather, crime and other unforeseen issues extend beyond your control, regardless of whether you’re completing a home improvement project. Due to this, you’ll want to consider how you can protect your home against losses during each stage of a home improvement endeavor.

Builders risk insurance can help you limit the risk associated with loss problems. It offers temporary protection, and the coverage will end after your home improvement project reaches its conclusion. Moreover, a builders risk insurance policy commonly costs between 1 percent to 3 percent of your total construction budget, which means you likely won’t need to break your budget to purchase this coverage.

Risk to Neighbors

A home improvement project may be considered a nuisance to neighbors, and for good reason. The endeavor may create excess noise at various points throughout the day. If you’re not careful, your home improvement project may expose your neighbors to a wide range of hazards.

Consider the risk that a home improvement project poses to neighbors. This will allow you to examine how your home improvement project may impact the local community, explore ways to minimize risk throughout the project and guarantee that you have sufficient home insurance coverage limits in place.

Storage of Personal Property

You may need to put your personal property in a temporary storage unit throughout a home improvement project, or you may ask a family member or friend to store your treasured belongings until the home improvement project is finished.

If you feel your personal property may be at risk during a home improvement project, you might want to relocate it before you kick off your venture. Also, don’t forget to notify your insurance agent, as this will enable you to ensure that your personal property will be protected at any location, at any time.
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Building Codes

Is your house up to code? If not, you may need to consider the costs associated with bringing your home up to code as you complete a home improvement project.

Some home insurance policies feature building codes coverage that helps homeowners pay for the costs to rebuild a residence that typically requires upgrades to meet current building regulations after a covered incident. This doesn’t cover renovations, however, unless you suffered a loss (such as a fire).

Reach out to your insurance provider to find out if you have building codes coverage included in your home insurance policy. This will allow you to learn the ins and outs of your home insurance policy — and your building codes coverage — and plan your home improvement project accordingly.

Home Permits

A professional contractor frequently picks up building permits before a home improvement project. On the other hand, if you decide to complete home maintenance and repairs on your own, you will be responsible for getting the right permits in advance. Check with the city or town government to find out what you need.

If you’re ever uncertain about how your home improvement project may affect your home insurance, or vice-versa, don’t hesitate to contact your insurance agent for extra help. It is always better to err on the side of caution, especially when it comes to your home insurance coverage. With an expert insurance agent at your disposal, you’ll be able to complete your home improvement project and minimize risk at the same time.


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About The Author
Ryan Hanley
Ryan Hanley is the Vice President of Marketing at TrustedChoice.com and the Managing Editor of Agency Nation. He is also a speaker, podcaster and author of the Amazon best-seller, Content Warfare. Ryan has over 10 years of insurance expertise and blogs frequently to help consumers understand complicated insurance topics.

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