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How renovations affect your home insurance

March 15, 2016
Any changes to your home could affect your home insurance.

Before you give your team the go ahead to get started on your home renovation project, make sure to give your home insurance agent a call. Any changes you make to your home will probably affect its value, and as a result, you may need to update various aspects of your coverage. To make sure you are covered both during and after the renovation project, it is best to get things figured out with your insurance agent before any construction begins.

"If you add any square footage to your home, it is vital to upgrade your policy.”

Adding more square footage

As explained in Nasdaq, there is a piece of your home insurance called dwelling coverage that covers the repairs to the structure of your home if it's damaged in certain disasters. Chances are, your current home insurance policy is only set up to provide enough coverage to rebuild your home at its pre-renovation size. If you add any square footage, it is vital to upgrade your policy so your insurer will pay to rebuild the entire home.

Square footage is not the only thing that matters for dwelling coverage, though. Bankrate explained that turning an unlivable space into one that can be lived in (such as finishing an unfinished basement) may also require you to add more coverage, as you have now increased the value of your home.

Upgrading the interior

Making expensive upgrades or adding new content to the interior of your home will probably raise your insurance premiums, but you will want to add that coverage to make sure your home insurance company will be willing to repair your damaged home to its upgraded condition and/or replace any new items you acquire. Nasdaq said new appliances and furniture can be covered under your home insurance policy, but you will probably have to increase your coverage.

More specifically, Bankrate said kitchen and bathroom upgrades tend to lead to premium increases. However, Jim Towns, an Illinois insurance agent, told the website that if the contractor working on these rooms also updated the plumbing or electrical systems, you may be eligible for a discount. All of these possibilities are the reason it is so important to speak to an agent before beginning any renovations.

Adding a swimming pool

If you are thinking about building a swimming pool, consider that it will significantly increase the risk of an injury happening on your property. As a result, adding a pool tends to drastically increase your home insurance premium. Check with your insurance agent about how much your policy will increase and whether you will need to meet certain safety requirements, such as putting a fence around the pool.

Who is doing the work? According to Insure.com, you will need to obtain different coverage based on whether you have hired a contractor or are doing the work yourself. If the project is DIY, and you are paying someone to help, you need to obtain your own worker's compensation policy. If, however, a friend or family member has volunteered to help you out for free, that person will be covered by your insurance policy if he or she sustains any injuries. If you are using a contractor, make sure he or she has his own liability insurance and worker's compensation policy before any work begins. Ask for proof. You don't want to be liable for any worker injuries in your home.