What Does My Insurance Cover for Remodeling?

June 30, 2020
Finished modern kitchen after house remodel

Are you looking around the house for the next remodel or addition to make on your home? 

Remodels can be expensive so, before getting started, you may want to know how much will your insurance cover and how much comes directly out of your pocket.

What Qualifies as Remodeling? 

When looking to your insurance to cover remodeling costs, be very precise for what you’re actually looking for. Remodeling isn’t renovating. The difference between the two is that a remodel means that you want to “remake” or alter the structure. To renovate means to refresh or restore something pre-existing.

Typically, renovating is less invasive and more feasible to do-it-yourself, like updating a bathroom. However, depending on the size of the project, a professional may still be needed. 

Remodeling requires a background in the field or a professional to do the job. The professional typically requires expertise and experience in the type of remodel you’re looking for. General contractors tend to be the proper solution, however, there are select professions for the project you need.

The reason a professional is required is that remodeling typically entails ripping out walls and existing structures to build new ones or create a totally new addition. 

Depending on the work you want to do to your home will determine what insurance is best for you and your bank account.

Insurance Coverage for a Remodel

Your homeowner’s insurance covers your house during a remodel, however, that may not extend to adding an addition. You should also be looking at your total insurance coverage limits as it sets the limitations to what insurance will pay and the remaining cost to you. Upgrade that coverage if you plan on a bigger remodel project.

A homeowner’s insurance policy typically includes coverages like personal liability and personal property coverage

This helps cover you if someone else gets hurt on your property as well as if your personal belongings get damaged or stolen.

It is also important to have the proper updated insurance for your home. Depending on the value of your home and when you got your insurance, your coverage may have changed.

Be sure to look into matching your property coverage limits to the new value of your home after the remodel.

Remodeling projects are an easy way to increase the value of your home, yet many people don’t realize they need to increase their coverage as well.

On top of ensuring you have insurance, you’re not only one who should have insurance for this project. If you are looking to add an addition to your home, remodel it, or even get a new roof, your contractor and subcontractors should also be insured and licensed in their field. 

One way to check that your contractor is insured and covered is by asking for their insurance information before hiring them.

Yes, they are able to and should always hand this information out to you.

Get the Proper Insurance for the Job

Builder’s risk insurance is one safety net that helps to cover you for any of the risks possible during a home remodel.

Risks involved in home remodels include:

  • Stolen or broken items
  • More people on your property increases liability
  • Exposing your house to damaging weather
  • Flooding or electrical issues causing fires or damage to your property or people on your property
  • Mold, if water enters the home or materials
  • Tools used by contractors can be flammable or dangerous
  • Certain projects require permits - insurance may not cover you if you don’t have the necessary permits
  • The value of your home may dip

Builder’s risk insurance is a form of property insurance that is created to address the possible hazards that can occur when undergoing home improvement jobs that require significant renovations.

If your home is undergoing a major remodel or addition and you and your family need to vacate the house for a period of time, it is important to know that a typical policy won’t cover a vacant home for more than 30 days. 

Unoccupied or vacant home insurance covers your home when you’re not there during a long remodel.

To find the proper insurance for your home, it is important to discuss your options as well as risks with a personal risk manager or insurance agent who specializes in home renovation insurance (which covers remodels). Renovation insurance is just adding coverage to your pre-existing homeowner’s insurance.

Depending on the size of the project, you will want to decide which coverage is best: Adding renovation insurance, or adding builder’s risk insurance.

You can purchase a builder’s risk insurance policy through specialized insurers.

You're most likely covered by your insurance company for the majority of remodeling projects for your home. In the case that you're not, find the best solution using the advice outlined here to ensure that you don't pay for the brunt of the expenses.

Enjoy your beautiful home!

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