June 25, 2014
Home Remodeling and Renovations Impact Homeowners Insurance
Homeowners who finally take the plunge to remodel their homes often forget to notify their home insurance agent. After all, lounging in a new sunroom with a cool pitcher of lemonade trumps a policy review. However, neglecting to update your policy to reflect the home upgrades can be a huge financial mistake.
Updating your insurance policy should start before you even pick up a hammer. Carefully check insurance verification for all contractors and companies that will be working in the home. Ask to see proof that they are licensed and bonded. In addition, if they don’t provide liability coverage for their subcontractors, you should add this to your insurance policy. If a worker is injured in your home and sues you, your insurance will then cover the costs to fight the lawsuit or pay out any damages. This situation also applies for simple additions where homeowners hire a single worker to install drywall, plumbing or electrical components.
Protection During Construction
Informing your insurance agent prior to commencing remodeling also saves money if something goes wrong before it’s completed. For example, if drywall is stored on your property and get damaged by a broken water pipe your insurance may cover the cost to replace it.
Protect Your Investment
Your homeowners insurance only covers repairs or replacement values for the furnishings that were in the home at the time that the policy was written. When people renovate, they use higher cost materials and appliances. Unfortunately, if the home is damaged your insurance policy will only pay the replacement value of the old materials.