Planning a Spring renovation? You should contact your insurance broker to discuss your insurance policy and if any changes need to be done prior to work even starting. Here are some important questions to consider:
What is the total monetary value of your planned renovation?
Your home insurance policy is designed to cover the replacement cost of your home. Many policies offer a guaranteed rebuilding cost endorsement but your home must be insured to 100% of the rebuilding value. A renovation as you know could increase that value and thus your contract must be updated in order to ensure proper protection.
What exactly is being done?
Your renovation could be maintenance related so more around replacing your roof, updating your plumbing and electrical while you renovate or remodel a bathroom or kitchen. You may be finishing your basement. These updates, as brokers call them, can actually reduce your insurance costs. If I knew, that my clients were finishing their basements before work actually began I would suggest including ways to minimize the possibility of suffering a water damage loss.
Will you be living in your home or will you be moving out?
Most home insurance policies require that the home remains occupied while it is insured. The reason for this is that homes that are occupied are less likely to be broken into and more likely to be well maintained. If you have to leave your home for an extended period of time while renovations are being made, you can request a vacancy permit from your insurer. Vacancy permits may cost a few extra dollars, but they allow you to maintain coverage while you’re away from home.
Is there structural work being done? An addition?
Extensive renovations may change the classification of your policy. If you’re making substantial renovations such as replacing an exterior wall or roof, your insurance company may change your policy to that of a building under construction, rather than a single family dwelling.
Have you engaged engineers or other professionals as needed to review plans?
You need to make sure that your contractor has insurance. You should request a copy of their policy and allow your insurance broker to review it. Do not allow an uninsured contractor to do any work on your property!
You may be liable for injuries to workers on your property. If a renovation worker or anyone else is injured on your property, you may be liable for costs and damages relating to that injury. You should also review the amount of liability coverage you have, it may be worthwhile to increase your coverage during the renovation period just in case something happens to a third party on your property.
You also want to make sure that all renovations are done to building codes. After all, you want your home to be as safe as possible. If your home is an older one, renovations may uncover a potentially hazardous building material or construction technique, such as galvanized plumbing or other materials that don’t conform to the current building code. Some of these changes may significantly affect the scope and duration of your renovation and therefore your insurance coverage.
Your home is one of your most significant investments. Purchasing a home is very exciting. Once you are the proud owner of a home regular maintenance becomes very important to protect it, your family and your belongings.
Home insurance rates are becoming more and more dependent on home maintenance factors that can help reduce the frequency and the severity of losses. Remember your home insurance policy is designed to cover the replacement cost of your home and not what it is worth on the real estate market.
Regular home maintenance can prevent damage and save you money in the long run. Some maintenance renovations and/or updates could also increase the rebuilding cost of your home. As a result, you must notify your insurance broker so that necessary changes can be made to your contract.