Does Homeowners Insurance Cover Renovations?

Yes. Homeowners insurance will cover many renovations as part of your home. However, there are a few caveats that we should explore. Make sure we use the right terms for your home upgrade to make sure we answer your questions clearly.

Before we go any further, know that a homeowner’s insurance policy will only pay up to the policy limit, minus any deductibles. Therefore, if your policy is $200,000, but you’ve spent $100,000 on upgrading your home, and think your home is now worth $300,000, your insurance policy will only pay up to the $200,000 policy limit (less deductions). be sure to tell your insurance company about expensive renewals.

Will HO Insurance Pay for Random Renovations?

Not. Know that homeowners insurance is meant to protect your home from loss and emergencies. It does not cover standard maintenance, or home renovations or upgrades that you choose to do spontaneously.

Just like your auto insurance won’t pay for new tires and an oil change, a homeowner’s policy will no pay for a new exterior paint job or new carpet. Those things are part of your standard maintenance costs.

Unless, of course, you need new paint and carpeting because there’s been a fire and part of your house has burned down.

HO Insurance is here to help you repair or rebuild your home after certain hazards such as fire, lightning, wind, explosion, and so on damage your property. If part of your home is damaged in a fire, the homeowner’s insurance will always cover it (minus the deduction, of course.)

What is the difference between home renovation and home renovation?

The terms “renovation” and “remodeling” are sometimes used interchangeably by homeowners. But insurance professionals know that is a different process. The results may be covered differently on your homeowner’s insurance policy.

  • Think of renovation as restoration, or preservation.
  • While the renovation project builds something new.

home renovation project maybe included:

  • Repairing cabinets, stairs or wood
  • Hanging period wallpaper in historical house
  • Restoring hardwood floors
  • Rebricking fireplaces and chimneys
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Renovation project it could be:

  • Breaking down the walls between rooms
  • Adding a door on the wall
  • Adding a new room at the back of the house
  • Added fireplace and chimney

You don’t need to tell your insurance company if you are doing routine maintenance. Standard wear and tear will occur in any home, and insurance agents expect you to constantly take care of your investment.

Things like new carpet, interior or exterior paint, or the occasional new faucet or toilet are no big deal. You don’t have to tell your insurance company every time you do a minor maintenance.

But many home improvements seem to be in the gray area between renovation and restoration. For example, what if you removed the old fireplace and chimney, and replaced it with a natural gas stove? This is an important overhaul for your insurance company because it reduces the risk of a fire in your home. You may find your homeowner’s insurance premiums dropping.

We’ve said it before, and we can’t seem to say it enough: any time you spend more than a few thousand dollars on home improvements, you should tell your insurance company.

Tell Your Home Owner’s Insurance Company About Expensive Upgrades

Homeowners insurance policies are designed to protect your financial investment in a home from fire, first. Yes, there are other important additions to most HO policies – such as liability and robbery – but they are built on the concept of fire protection.

The idea is that you can rebuild a new house – just like the original – and replace all your belongings if the house catches fire.

Therefore, if you invest $25,000 in new kitchen cabinets, windows, countertops, and flooring – even if these items are only worn out from standard use – you should tell your insurance company. You may need more coverage if the value of your home increases.

Be sure to provide your agent with a receipt and photo, so they can document your improvement.

About Wiring, Pipe and Roof Replacement

Of all the thrilling aspects of home remodeling, changes to your plumbing, roof, and wiring are the most boring ideas for homeowners. But some of these updates can give you significant discounts on your insurance bill.

Notify your insurance company of any changes or upgrades to:

  • HVAC systems – air conditioning, swamp coolers, new furnaces, and so on
  • Power cable
  • Plumbing
  • Home security systems – often worth a discount on your insurance premium
  • Fire suppression systems or sprinklers – always get a discount on insurance
  • And roofing – many insurance companies will offer several years of discounts on homes with new roofs
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And remember, if you make an expensive upgrade, save the paperwork! Your insurance company wants paper proof that you paid money for this upgradeas opposed to just getting a quote.

How about the Deck and Porch?

In addition to permanently attached to your home, decks and verandas are covered by homeowners insurance.

If, for example, your neighbor’s house catches fire and your deck catches fire and is partially burned, it will be covered by your homeowner’s insurance (or by your neighbor’s HO insurance, through a process called subrogation).

Since the veranda and deck are covered, insurance companies want to know if you are adding or upgrading them. Again, any time you make home repairs worth more than a few thousand dollars, notify your insurance company.

About Adding & Renovating Other Structures

We’ve talked a lot about home remodeling/remodelling. But what about other structures on your property?

The garage, wellhouse, workshop and gazebo are all covered by your homeowner’s insurance policy – ​​up to a point. That point is usually 10% of the value of your home, unless you specifically do something else with your insurance agent.

If your home is insured for $150,000, you other structure coverage usually $15,000. Is that enough to replace all your outbuildings in the event of a fire on the property?

Let’s take a closer look at one common property overhaul and its complex insurance implications.

Renovating Garage Into Rental Unit

Garage-to-rent renovation can cost $100,000 in a metropolitan area. Think about plumbing, HVAC, carpet, appliances, insulation, and so on. That little structure suddenly becomes a lot more valuable, mainly because it gives you a monthly income.

But leasing also carries the risk of liability. Your tenant may slip and fall on a cold night, or accidentally start a fire in the stove. Therefore, garage-to-rent renovations must be insured with the owner’s protective policy. This protects the structure from hazards such as fire, and protects the property owner from liability, should the tenant ever try to sue.

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