Home renovations can have a major impact on your home insurance policy. A recent analysis conducted by the Insurance Information Institute (Triple-I) showed that the replacement value of homes increased by more than 13% in the last year due to inflation and supply chain problems. This means that it is important to evaluate coverage when completing a renovation project. Homeowners should consider whether their home renovations will affect their home insurance policy.
Improvements, renovations or extensions can increase the value of your home and require more coverage and change the cost of your policy. For example, if you opt for a metal or shingle roof, you could increase the replacement cost, which could increase your premium. Homeowners insurance will not pay the cost of renovations unless they are directly related to the covered damages. Your home insurance covers your home during a remodel.
However, that protection may not automatically extend to an addition, especially if you built it without a permit. Depending on the scope of the project, the contractor may offer risk coverage to the builder to protect the increase in the value of the home and the construction materials used to renovate it during construction. Home renovation insurance goes above and beyond to protect your repairs and renovations when and where your primary home insurance policy isn't enough. You can expect the value of your home to increase approximately 71% of your renovation costs by approximately 71% with a small kitchen remodel that replaces cabinet doors, installs a new countertop and appliances.
Some home renovations will increase your home insurance rates, while others may make you eligible for discounts. If you're going to make changes that make your home safer, such as upgrading electrical or plumbing systems, you may receive lower rates after you and your insurance provider evaluate your insurance needs for your home renovation.