Key Takeaways

• Major renovations like additions or kitchen remodels raise your home’s value, requiring updated coverage.
• Improvements like a new roof or security system can reduce your insurance costs.
• Additions like pools or rental units often increase liability exposure, raising premiums.
• Failing to update your policy after renovations could leave you underinsured.

Renovating your home can increase its value, comfort, and functionality. However, some upgrades can also impact your home insurance premiums and coverage. Understanding how these changes affect your policy can help you make informed decisions and avoid unexpected costs.

Here are five common renovations that can alter your home insurance.

1. Adding an Extension or Room

Expanding your home with a new room or addition increases your property’s value and rebuild cost. Since home insurance premiums are partly based on the cost to repair or replace your home, your coverage may need to be adjusted to reflect the new square footage.

Failing to update your policy after an addition could leave you underinsured in a disaster.

2. Upgrading the Roof

A new roof can significantly affect your home insurance premiums, often lowering them due to reduced risk of water damage and structural issues.

Many insurance providers offer discounts for impact-resistant or fire-resistant roofing materials. However, the type of roof you choose can also influence your rates. Be sure to notify your insurer after a roof upgrade to ensure your policy reflects the improvement.

3. Building a Swimming Pool

Adding a swimming pool increases your property’s value and liability risk. Insurance companies typically recommend increasing liability coverage to protect against potential accidents.

Some insurers may also require safety measures, such as a fence with a locking gate, to reduce risk. Without proper coverage adjustments, you could face significant financial exposure.

4. Remodeling the Kitchen or Bathroom

Kitchen and bathroom renovations often involve high-end appliances, fixtures, and materials that increase your home’s value.

These upgrades may raise the replacement cost of your home, which can affect your insurance premiums. Updating your policy after completing major renovations is essential to ensure adequate coverage for the upgraded spaces.

5. Installing a Home Office or Rental Unit

Converting part of your home into a home office or rental unit can change your insurance needs. Operating a business from home may require additional coverage, such as business property insurance or liability protection.

Similarly, renting out a portion of your home could require landlord insurance. Informing your insurer about these changes is crucial to avoid gaps in coverage.

Conclusion

Home renovations can improve your property’s value and functionality but can also impact your home insurance coverage and premiums. Whether you are adding a room, installing a pool, or remodeling your kitchen, updating your policy to reflect these changes is essential. Notifying your insurer and adjusting your coverage can ensure your home is fully protected.