What Home Renovation Projects Raises Your Insurance Rates?

Adding On An Addition

If you add a new room to your home, you also increase its square footage and "worth." Your homeowner's insurance will increase proportionally to your addition's square footage. Most of a homeowner's premium depends on how much it would cost to rebuild their entire home in the event of a catastrophic event. Your premiums will increase proportionately to the cost of rebuilding a larger dwelling.

Do not wait until the completion of the addition to notify your insurance agent and obtain coverage. Two weeks before the completion of a new wing on your home, an electrical fire completely destroys the structure. You cannot recover the money you spent on that project without insurance. Having the proper insurance coverage from the minute, you hire a contractor and obtain a building permit will assist in covering any disasters that may occur during or after construction.

This is particularly significant considering that construction periods are deemed "high risk" for theft and destruction. It is essential to protect against that risk.

Adding A Residence Office

If your home office addition is purpose-built, you may need to change your homeowner's and business insurance policies. Home-based enterprises have unique requirements, especially if you may have visitors who could affect your liabilities. Consult our page on small companies and home businesses to discover more about how to effectively handle homeowners' and business insurance.

Making Inhabitable Space Habitable

Changing your insurance may be necessary if you convert a garage, attic, or shed into a dwelling. If the area is currently covered by your homeowner's insurance liability and property coverage, your policy may not change. However, suppose this room was previously uninsured. In that case, you will need to add it to your homeowner's insurance in order to safeguard it from any potential property damage, theft, or liability.

If you are converting a garage, you may also need to modify your auto insurance. Your auto insurance premiums will likely increase if you park your vehicle on the driveway or street, as it is considered riskier to park a vehicle outside a garage.

If the freshly renovated space is to be utilized as an apartment, landlord insurance may be necessary. This is still true even if a family member is renting the apartment.

Renovation of Existing Rooms

Even if you are not adding additional square footage, renovations may increase your homeowner's contents coverage due to the increased value of the goods. For instance, installing granite worktops and hardwood flooring is considered a high-value investment in your home. The same holds true with new home furnishings and appliances.

Rebuilding Post-Disaster

A disaster damaged your home, and you filed a claim with your insurance provider. You are currently rebuilding your home with the insurance money.

Almost certainly, your future homeowner's insurance premiums will increase due to this makeover. Every claim makes you seem "riskier." The more your risk, the greater your premium.

This should not discourage you from filing a claim with your insurance provider. However, you must be aware that each claim may affect your coverage.