After Home Improvements, Update Your Homeowners Insurance

diy-home-improvementThere is a boom in home improvements this year. Whether your addition budget is large or small, you are adding both the value of your home and your exposure to risk. To ensure that your project goes smoothly and that you have the coverage you need, here’s what you need to know.

Homeowners who have upgraded their dwellings sometimes hesitate to call their insurance agents out of concerns that their premiums might increase. The fact is, home improvements don’t always lead to higher premiums. It’s true that some types of improvements, like a kitchen remodel, will raise the value of your home. But there are many other improvements, like a new roof or home security system, which could reduce your insurance costs.

Insuring the Real Value of Your Home

Experts estimate that 1 out of 4 remodeling projects adds at least 25 percent to the value of a home, yet often most homeowners forget to increase their coverage to protect their investment. Most homeowners insurance policies require 100 percent of the home’s replacement cost, so it’s important to raise your home’s policy limit before your project begins.

Advice for Do-It-Yourselfers

If you decide to do it alone and manage a renovation yourself, you assume all the risks. A review of your homeowners coverage for liability and property is prudent, as you are assuming more risks and exposures than contemplated by homeowners insurance.

Hiring subcontractors who can provide you with a “Certificate of Insurance” or copies of their policies showing their general liability and workers’ compensation coverage is mandatory for your legal protection. Otherwise, you could be subject to workers’ compensation laws, should they become injured while working on your home. If a friend or relative helps out as a favor and gets injured, your homeowners insurance typically covers the cost of their injuries, up to your policy limits. For an extra layer of protection, it’s a good idea to also carry umbrella liability coverage, which kicks in to provide liability coverage above your homeowners limits.

The best time to review your insurance is anytime you make changes, or at the least, 30 to 60 days before your policy’s renewal date. If your coverage is complicated, talk to us  closer to 60 days before renewal. One benefit of starting the process sooner: you may receive an advanced quote discount.

Reviewing Your Policy

Begin by reviewing these three areas in your homeowners policy: the replacement value of your home (not the same as its market value), the contents in your home, and any scheduled specialty items.

We can help you determine the replacement value of your dwelling by carefully estimating the replacement value of your home’s contents. Some specialty items like jewelry, watches, or other valuable items may not be part of the standard contents coverage, so you should obtain special coverage for them.

When reviewing your homeowners insurance policy, be transparent about anything that could affect premiums. Our job is to get you the best coverage at the best price. The more we know about your home improvements and life changes, the better we can advise you and help protect you from expensive surprises if you need to file a claim down the road.

Adding to your home is exciting, but poses financial risks. Contact Anderson Insurance Agency at 609-597-8507 to learn more about all of our home, auto and life personal risk management solutions.