How Home Renovations Affect Your Homeowners Insurance

Home renovations are very common during the summer months when homeowners typically have more flexibility in their schedule and contractors can complete projects quickly due to better weather. Although renovating your home is an exciting process, homeowners must be informed about the potential risk to their homeowners insurance. The following are few ways a renovation can affect your home insurance policy.

Renovations May Leave You Underinsured

One great benefit that comes from renovating your home is the fact that the upgrades often increase your home’s value. When you add more square footage or improve the look and function of a particular room, you create value. Unfortunately, creating value for your home will often mean that you don’t have enough homeowners insurance if you experience a total loss. You can remedy this problem quite easily by speaking to a licensed insurance agent and purchasing more coverage.

You May Increase Your Liability with Additional Home Improvements

Insurance companies rate your insurance based on risks. Homeowners that appear to be more of a risk are charged more for their coverage. For instance, if you are not in a reasonable distance from a fire station, you will likely be charged more for your homeowners insurance. The same premise holds true for renovations. Renovations that are risky can result in your home insurance policy increasing. The following are some renovations that may increase your homeowners insurance.

• Adding a swimming pool


• Adding work space for a business


• Adding a recreational room

Any renovation that can lead to someone being injured on your property will likely negatively affect the cost of your home insurance.

Safety Renovations May Reduce the Cost of Insurance

Not all renovations are created equal in the eyes of your insurance company. Even though there are some home improvements that may increase the cost of your homeowners insurance, there are some that can reduce the cost of your insurance. For instance, replacing your roof can save you money. With a new roof on your home, you are protecting your home from severe weather. Insurance companies view this favorably and it may result in insurance savings for you.

It is easy to get caught up in the excitement of getting home improvements and miss informing your insurance company about your plans for home renovations. However, they need to know so that you will have adequate insurance and so that you can capitalize on improvements that lead to discounts.