Home Renovations and Your Insurance Policy
April 24th, 2023
Your home is your biggest asset, and you take great pride in your ownership. Beyond routine maintenance or general upkeep, you may make some updates while owning your home. Whether you are handy enough to do it yourself or decide to outsource the work, keeping your broker up-to-date on your projects is imperative. Here are all the ways a home renovation can affect your home insurance.
Dwelling Coverage
You may recall that when you first purchased your home insurance, your broker asked precise questions regarding your home. This is because each company calculates the replacement cost of your house to determine the dwelling coverage. The replacement cost gets calculated using the specific characteristics of your home, including square footage, number of stories, roof material, and type of foundation.
Changing any of these aspects of your home can alter the replacement cost, which could affect the amount of money you get in the event of a claim. Therefore, you must update your broker on any changes you make to your home.
The changes that can have the most significant impact on your replacement cost are as follows:
- Adding square footage
- Updating bathrooms or kitchens
- Gutting any portion of your home
- Adding special features such as skylights, pocket doors, bay windows, French doors, etc.
- Finishing a basement
- Installing solar panels
Eligibility
In addition to increasing the coverage your home is insured for, home renovations can also affect the risk of insuring your home. Insurance companies have the right to deem you too risky to insure and either cancel your existing policy or deny you a policy altogether.
Although the eligibility guidelines vary by insurer, the following updates require additional consideration.
Swimming Pools
Who does not love a swimming pool, right? The answer is some insurance companies. While they can be a selling point to home buyers and great to have in the summer, they can also be dangerous.
Due to the potential risk, some insurers may charge you more money for a pool or require specific precautions taken to insure them. If you are considering installing a pool, you should also consider factoring in the cost of installing a fence around your yard to prevent any potential accidents with children or pets. These lessen the risk of someone getting hurt, making you more attractive to insurance companies.
Secondary Heating Sources
Many homeowners use a secondary heating source, such as a fireplace or wood stove, in the winter months. These devices can affect not only the price of your policy but also your eligibility with the company. Fireplaces and wood stoves increase your risk of loss, especially if you are using them as your primary heat source.
If you decide to install one, even if you are using it on a secondary basis, notify your insurance company so they can adequately assess the risk.
Trampolines
Trampolines are another example of a home upgrade that can affect your insurance eligibility or premium. This is because trampolines pose a higher risk of liability loss to homeowners. In addition to having the trampoline in a fenced yard, most companies will also require a safety net around the trampoline.
Because of the higher risk of injury, homeowners should check with their insurance company to determine if trampolines are allowed.
Firepits
Installing a firepit in your backyard can be appealing to many homeowners. However, there are some considerations one may need to make. First, due to the inherent fire risk, you will need to confer with your insurance company so they can make any necessary updates to your policy.
You may also be required to install it a certain distance away from the primary structure of your home or have it professionally installed to be eligible.
Discounts
Not all home renovations will result in a premium increase. You can make some changes to your home that can lower the cost of your insurance. These renovations generally involve making your home safer or less risky to insure. Here are some updates you can make that will save you money.
Roof Replacement
Many home insurers partially base your premium on the age of your roof. Older roofs can mean higher or more frequent claim payouts than newer ones. This is because an older roof has the potential to leak more so than a newer roof and is susceptible to damaged shingles or poor ventilation, which can lead to issues with mold.
Due to this, and possibly as an incentive for their insureds to maintain their roofs, insurance companies will frequently offer discounts for your home having a new roof. The discount amount can vary by company; some may even build this credit into the rates. Either way, let your broker know if you make this update, as it can save you money.
Security System
Installing a security system in your home may not seem like much of an update, but it can drastically improve your odds of a break-in. In addition, it can save you money on your home insurance. From burglar alarms to fire alarms and security cameras, there are many options for homeowners looking to secure their homes.
Almost all homeowners will offer discounts based on your chosen system and whether it is a local alarm or professionally monitored. Depending on the company, these discounts can range from 10% to 35%, making it worth looking into!
Smart Home Devices
More home insurance companies are starting to offer discounts for smart home devices such as water or low-temperature sensors. These devices will sound an alarm if a water leak or low temperature is detected, which can prevent more significant losses from occurring.
Due to the decreased risk of flooding or freezing, insurance companies offer sizable discounts for installing these devices in your home.
Final Thoughts
You put a lot of love into your house to make it a home, and you should protect it similarly. Keeping your home safe by installing protective devices and taking steps to mitigate losses can save you money on your insurance. Whether you are making extensive renovations or just keeping it up to date, it is essential to notify your insurance broker.
For more information on how your home updates affect your insurance or to get a quote, contact our team at Duliban Insurance Brokers today!
