How Do Renovations Affect Your Home Insurance?
Renovations can impact your Home Insurance. Sometimes your renovations result in higher premiums, and other times you could end up paying less than before for your Home Insurance! The impact your home upgrades have on your Home Insurance will depend on a variety of factors. We discuss these factors below and look at how you can turn your renovations or home upgrades into opportunities to save on Home Insurance premiums.
Renovations Can Make Your Home Insurance Premiums More Expensive
Renovations and home upgrades can make your home insurance premiums higher because a more valuable home will cost more to insure. When you take out insurance, part of the process includes determining the type and extent of cover you require. Will you insure your home for its market value or for its replacement value?
Insurance for a home that is insured solely for its replacement value often costs less than a home insured for its market value. This is because the cost of replacing the actual structure, including materials and labour, is usually lower than what you bought the place for. There are exceptions, of course, like a 100-year-old Victorian-style building with unique antiquities built into the structure.
If your home’s value increases because of the renovations (it usually does), you could end up paying more for insurance. A new kitchen and upgraded building structure will increase your home’s market value, and newer infrastructure may cost more to replace. You can best determine the impact your renovations will have on your insurance premium by having your property re-evaluated by a professional evaluator after renovations.
Once your home has been revalued, you can talk to your current home insurance provider about any impact the renovations have had on your insurance premiums. Finally, compare what their updated offer is with what other insurance providers are offering. In this way, you can make sure you take advantage of the benefits of the policy you choose and that you aren’t being duped into paying more than necessary for less than you need.
During Renovation, Your Home Insurance Cover Can Change
Workers who will be working on your property need insurance cover. This protects you from any liability claims should an injury occur. Before you hire contractors, make sure their workers are adequately insured.
Many homeowners are tempted to cut corners so that they can renovate their home while saving money. The money you save now usually can’t compare with what you may need to spend on repairs later. We suggest hiring a reputable contractor.
A reputable contractor ensures that their workmanship remains at the top echelon of their trade. In this way, you will get great home renovations that are less likely to fail or cause damage. Shoddy workmanship can end up costing you a lot.
Not all eventualities are covered by all insurers, and before renovations begin, it’s important to find out what is and isn’t covered. Here are some examples of occurrences your insurance provider might not cover:
- Walls, tiles, and bathroom fixtures that get chipped
- Accidentally piercing a water pipe during construction
- Water damage that is caused by an event not included in your insurance (like forgetting a tap open versus a severe storm)
- Damage occurring in the process of felling trees, and the removal of these trees
- Cracking and collapse that is not caused by an insured event like a landslide
To make sure you remain adequately covered, speak to your Insurance Provider. Ask if there are any exclusions that apply, or if there are any steps you need to take to make sure you are covered during renovations. Some insurers will require that the home remain occupied during renovation for your cover to stay the same.
Renovations Can Help You Save Money on Home Insurance Premiums
Often the type of renovation you’re undertaking determines the impact it has on your insurance premium. Pools are a great example. Adding a pool increases the value of your home, but it also increases the risk for liabilities. A pool notoriously impacts your home insurance premium and can often make it more expensive. Then there are the kinds of home improvements that can actually lower your premiums!
Upgrades to Your Home that Increase its resistance to Weather Damage
If you’re upgrading your home so that it can withstand weather more effectively, chances are it could reduce your monthly premium. Monthly premiums are impacted by risk factors in your area, particularly natural disaster risks.
It follows then that upgrades like adding storm shutters, reinforcing your roof, and retrofitting your home to better withstand earthquakes can positively impact your home insurance premiums. You can make many upgrades that lower your risk profile, and in so doing can lower your premiums. Consider upgrading your plumbing, heating, electrical systems, and geyser. Remember to keep the receipts for all your efforts to present to your insurance provider should they require it.
Are you looking for a better deal on home insurance now that you have upgraded your home? You can compare home insurance quotes online to find the best deal. Don’t wait, you could start saving today!
DISCLAIMER: The information provided in this article is meant for informational purposes only and should not be construed as legal, medical, or financial advice. Facts stated in this article are correct at the time it was published.
Sources: iol; insurancechat; ooba; budgetinsurance; axiagroup;