Home renovations are common projects in the US, especially in recent years. In 2020, more than half of homeowners who renovated their homes belonged to the Baby Boomer generation. The next-highest percentage went to Generation X, with nearly a third of those who reportedly renovated their homes.
While these generations may have more knowledge of home renovation projects, they also need to be familiar with how changes to their property can impact their insurance. An independent insurance agent can help you review your homeowners insurance coverage and how it may change after a major project. But for starters, here's a breakdown of six common home renovations and how they can impact your coverage.
Six Home Projects and Their Effect on Your Insurance
When you make changes to your home, such as adding or removing an entire room, it can also cause your insurance needs to change. If you add something to your home and increase its value and/or square footage, you may need to increase your coverage limits as a result. But there are other ways that home insurance can be impacted by home projects that you should be aware of as well.
1. Performing Kitchen Renovations
If you've been envisioning a brand new kitchen, there can be some insurance considerations to factor in before you update your countertops or cabinets:
- If you hire a contractor such as an electrician or plumber, you'll want to make sure they're legitimate and carry their own coverage. Ask for proof of contractor insurance and liability coverage before you allow them to start working on your home.
- Ask your independent insurance agent if you'll need to increase your homeowners insurance coverage or not. For renovations that increase the value of your home, you could end up without enough coverage if you don't raise your limits.
- If your friends will be helping you with renovation projects, talk with your independent insurance agent about potentially increasing your medical expenses coverage in case someone gets hurt.
Updating your kitchen can be extremely rewarding, it just might be a project that requires changes to your home insurance first. Make sure to review your home insurance with your independent insurance agent before starting on your dream kitchen.
2. Conducting a Bathroom Makeover
Maybe you feel it's time to update your bathroom, such as by adding a new claw foot tub, improved vanities, or changing out the floor and shower tile. Just keep these considerations in mind:
- A professional plumber might need to be called in to help you move the location of your plumbing equipment, such as a drain, sink, or shower. If the worker damages your home with water while on the job, remember that your homeowners insurance won't cover it. However, the plumber should carry their own coverage for such an incident, so remember to ask for proof of it upfront.
- If you'll be ordering a lot of new materials for your bathroom renovation that will be stored at your home before the project begins, keep in mind that you'll need coverage for these things too. Ask your independent insurance agent about adding a builders risk policy to cover project materials that aren't yet officially a part of your home.
An updated or upgraded bathroom can seriously increase your home's value. Because of this, just make sure to check in with your independent insurance agent to update and upgrade your homeowners insurance coverage right along with your bathroom.
3. Converting a Room into a Home Office
Perhaps it's time to turn one of your unused rooms into a functional space, and you're ready to create that home office. While you're not making a huge addition to your home for this project, there are still a couple of things to consider:
- If your new home office will be storing a lot of equipment, remember that your home insurance policy often only includes a limit of $2,500 for this type of property. Ask your independent insurance agent about home business endorsements if you'll be keeping more than this amount at your home.
- You may need an entire business insurance policy if your entire business will be run from home and you're self-employed, especially if clients or other business contacts will be visiting your property. If you're working at home for another contractor, check to make sure you'll be covered by the company's policy as well as their workers' compensation insurance.
Home offices can certainly be convenient and rewarding spaces, but they can also change your coverage needs. Double-check with your independent insurance agent if your existing coverage will no longer be enough if you start working from home.