Insurance needs when you're renovating your home

Should I contact my insurance company if I want to do renovations on my home?

Smaller projects might not require the homeowner to update the insurance company. However, if a loss occurs during a home renovation, the insurance company can charge an additional fee to cover it or deny the claim outright.

Check with your insurance company before starting any renovation projects to see if you need additional coverage. Let them know what you plan to change and the approximate timeline for the project. They’ll be able to tell you if you’ll need to increase your coverage to include any new materials or appliances you install.

Some companies offer special add-on policies called dwellings under renovation coverage. This is different from normal dwelling coverage. Think of it was home renovation insurance. These policies are designed to protect your structure as the construction changes take place. An insurance agent will be able to advise you if you need to purchase one of these policies to protect your structure and materials while the project is underway.

What do I need to think about when hiring a contractor for renovations?

Homeowners should hire a contractor for any changes to the home's structure. Because they do large projects professionally, contractors and subcontractors know which permits and other vital information they'll need to make the job go as smoothly and efficiently as possible. 

It’s important for you to be aware of your contractor’s insurance policy. Before signing the contract, ensure that your contractor has:

• Worker's compensation insurance, and 
• General liability coverage

In most cases, the contractor’s insurance is primary, and the homeowner's policy is secondary if there's an incident on the job site. Without those items in place, the homeowner could be sued for any damages and injuries that occur while the home is under construction. 

Liability coverage and medical payments are two aspects of a homeowners policy that the homeowner sets when they set up the policy. Liability insurance protects the homeowner by paying for a lawyer and covering a lawsuit payout if someone was injured on their property and sues for compensation. The coverage amount usually ranges from $100,000 to $500,000. Medical payments go to the injured party to pay their medical bills. The coverage amount usually ranges from $1,000 to $5,000. 

For more significant projects, homeowners might consider adding an umbrella policy to their homeowners insurance cover. Umbrella policies are affordable, usually between $10 and $50 for the year. But they add extra liability protection to their buyers. Coverage for these types of insurance starts at $1,000,000 and can go as high as $5,000,000+, depending on the company. This means that if a policyholder has $500,000 in coverage for their home policy, they could have a total of $1,500,000 in coverage by adding an umbrella policy. Note that most companies will require you to meet a higher threshold for your liability coverage in order to enact an umbrella policy. 

Do I need permits to renovate my home?

You’ll need permits for any jobs involving:

• Moving or adding rooms
• Adding outbuildings like sheds, decks or garages
• Plumbing work
• Electrical work

Can my coverage remain the same if I'm not living in my home during the renovations?

If the home is vacant for longer than 30 days, the homeowner needs to secure vacant home insurance.

The vacant home policy protects a house similarly to traditional home insurance coverage. They cover theft, vandalism, fire, lightning, wind and hail. But the separate vacant home coverage accounts for the difference in risk between an occupied home and an empty home. If a fire broke out in an occupied home, the homeowners could put out the fire before it caused too much damage. In a vacant home, the same fire could cause much more damage before anyone realized it was there. 

Homeowners can customize some policies to fit their needs. They can indicate whether the home will be under construction during that period. They can also extend coverage to the materials, workers and part of the building that's under construction.