Home Improvements: Do I Need to Update My Insurance Coverage?
If you’re planning some renovations or
improvements to your home, it may not occur to you during all the hustle and bustle of planning
and working with contractors that you may need to update your
home insurance policy. Depending on what type of home renovation you’re doing,
the finished product may leave you over- or under-insured, and some renovations
may leave you eligible for discounts on your premium.
Continue reading to learn about five common
home renovations and how they can impact your home insurance.
Building
an Addition
When you purchase home insurance, part of your rate is
determined by your house’s square footage and the requisite cost to repair it
in the event of any issues or losses. If you are doing renovations to expand
the square footage of your home, you may be increasing your home’s value from
what it was when you purchased your policy.
It’s very important you update your home
insurance after building an addition to ensure you aren’t under-insured in the
event of something happening to your home. If you build an addition without
updating your home insurance, you may not be fully covered and could be liable
to sustain losses if your house is damaged.
Remodeling
Your Home
As with building an addition, if you are
remodeling your home’s kitchen or bathroom, you may be increasing the value and
thus in need of updated or additional coverage. If you upgrade your kitchen or
bathroom and something were to happen to it, without updating your coverage you
may be liable to cover some of the damage out-of-pocket.
Common upgrades that can affect your insurance
include installing new countertops, replacing cabinets, and redoing a hardwood
or tile floor. If you’re undergoing these renovations, you may want to review
your coverages to ensure your upgrades are covered.
Installing
a Security System
There are two kinds of home security systems: professionally
monitored or self-monitored. Home security systems are becoming more common as
self-monitoring options are now easily accessible and affordable.
Installing a security system in your home can
give you peace of mind as a proven burglary deterrent, and some insurance
companies will offer a discount to your premium if you have one installed. If
your home security system includes features like
environmental monitoring to detect fire, smoke, or water damage, you may even
be eligible for additional discounts, depending on your carrier.
Adding
a Swimming Pool
Depending on the type of pool, adding a
swimming pool to your property can affect your insurance and fall under the
category of other structures (also known as Coverage B).
If installing a pool, you may require liability coverage as pools are
considered an “attractive nuisance,” which is a feature on your property that
also presents some degree of danger.
If you have a new pool, you also have a new hazard with which
one could injure themselves. The reality is, the world is a litigious place and
it is not uncommon for a person to be sued. Umbrella coverage can help you protect
your finances and avoid financial difficulty if you were ever sued and the
judgment or settlement exceeded your underlying policy limits.
Rewiring
Your Home
Rewiring your home can be a costly upgrade to
make, but one that can improve the safety of your residence and consequently
may lower your premium. The quality of a home’s electrical system can affect insurance because
poor wiring can result in fires or electrical problems.
If you’re improving the wiring in your home,
you’re also increasing the value and the level of safety.
Renovating, remodeling, and adding to your
home are big undertakings that can increase your home’s value and make it a
more comfortable, personalized place to reside. Be sure to update your
insurance to reflect these changes to save yourself from any issues that could
take place after the fact.
