Home renovations to consider with your insurance policy
July 8, 2014
Thousands of homeowners across the nation are asking the same question: How can I lower my home insurance costs?
According to Teresa Taylor, a personal lines sales and service agent for an insurance company in Holly, Michigan, one home improvement project in particular can help save you up to 20 percent on your policy.
A new roof can help save you up to 20 percent on your homeowners insurance policy.
“Roofs are huge right now in the insurance industry,” Taylor told the Tri-County Times. “With all the storms and damaging weather, some policies will give credits for new roofs for up to five or 10 years. If you have a new roof, you should certainly let your agent know.”
The average combined costs of wind, hail and water damage is more than $14,000, according to the Insurance Information Institute, which highlights the importance of a sturdy roof. Taylor realizes that many homeowners are undertaking home improvement projects—especially in the summer. She said it's important to keep your insurance agent up to date with any projects you may be starting.
“So many things change in the course of one year,” Taylor said.
Remodeling projects that lower insurance costs
?While you shouldn't start a home renovation project solely to lower your insurance rates—you should take on projects that add value or necessities to your home—you can consider a remodel that will curb your insurance rates over the long haul of your ownership.
One way to do is so by modernizing your heating, plumbing and electrical systems. By taking these measures, you can greatly reduce the risk of a fire or water damage to your home. According to Forbes, major repairs to a sewer line or skeptic tank can cost you from $25,000 to $50,000.
Eileen Evans Jankowski, personal lines manager at Brown & Brown Insurance in Fenton, Michigan, told the Tri-County Times that “if you can help prevent losses, it will come back to you in the form of lower premiums.”
Jankowski was also referring to making your home resistant to disasters. For example, if you live in a flood-risk zone, you might want to purchase a backup sump pump.
Not all renovations are created equal
While a new roof could could help lower your home insurance costs by up to 20 percent, many home renovation projects might actually increase your insurance premiums.
According to Angie's List, a remodeling project—if done right—will add value to your home. While that's great for you at the time of a sale, when your home adds value, your insurance rates will reflect that. A more valuable home will take more to insure, and costs will likely be higher for a 3,500 square-foot home than a 2,500 square-foot home in the same neighborhood.
For example, if you spend $40,000 on a kitchen remodel, your home could see anywhere from a $13,000 to $37,000 improvement in overall value, according to Angie's List. That would impact your home's overall replacement costs, which can influence your policy and cause your premium to climb.