How Renovations Impact Homeowner’s Insurance Coverage

How Renovations Impact Homeowner's Insurance Coverage
Although the fall season has just begun, some homeowners are already dreaming up their next renovation project. However, before diving into a home renovation, it’s important that insureds are aware that some renovations can impact their homeowner’s insurance and level of coverage.
Because homeowner’s insurance is not always top of mind for property owners that are eager to get started with a new renovation, insurance carriers can add a lot of value by making them aware of how these changes will impact their need for coverage. Conducting an in-person property inspection provides an opportunity for homeowners to discuss upcoming changes to the property such as a renovation and learn from carriers what they should be taking into consideration from an insurance perspective.

Insurance carriers should make insureds aware of how these common renovation projects can impact their homeowner’s policy:

1. New Addition
Expanding and improving a property will often increase the market value of the home, thus increasing its replacement value. Upon completing the renovation, the homeowner should contact the insurance carrier to make them aware of the new addition and increase coverage. The insurance carrier can utilize inspection technology to more accurately determine the new replacement value of the property.

2. Pool
While adding a pool has the potential to increase the market value of the home, it also introduces new risks. Before adding a pool, the homeowner should contact the insurance carrier to see if the existing policy covers a pool and if the liability coverage should be increased. Insurance carriers should also educate the homeowner about ways to mitigate risk around the pool and save on premium costs, such as adding a fence with a smart lock, installing a pool alarm, and skipping the diving board.

3. Deck
A new deck will generally increase property value, especially for decks that are added to a second story or higher. If adding a deck, insurance carriers should consider increasing the replacement cost of the property.

4. Kitchen
A kitchen addition will often increase the property’s value, especially if high-end finishes are installed. Insurance carriers can use inspection technology to more accurately determine the value gained from the kitchen renovation and ensure that adequate coverage is in place.

5. Basement
Before completing a basement renovation, insurance carriers should talk to homeowners about the increased flood risk as most homeowner’s insurance policies don’t cover flood damage. Insurance carriers need to educate homeowners about ways to mitigate flood risk with a basement renovation, such as installing a sump pump.

6. Roof
In some scenarios, insurance carriers are willing to offer a discount to insureds that re-do their roofs with stronger materials that are wind, hail, and leak-resistant. A new roof also has the potential to increase property value, so insurance carriers should discuss coverage levels.

All in all, it’s a best practice for homeowners to make insurance carriers aware of renovations that they plan to make to their property. Our team at Insurance Risk Services partners with insurance carriers to complete in-person property inspections so that insurance risk can be more accurately underwritten. Our insurance carriers utilize the latest inspection technology to complete detailed reports and identify new ways to serve insureds.

Contact us to learn more about how we can use a property inspection to make insurance carriers aware of improvements and how we educate insureds about how these new projects impact their insurance coverage.

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