Do Home Renovations Affect Your Homeowners Insurance Rates?

Some people look for a beautiful place, others make a place beautiful.” – Author Unknown

Home renovations can make your house more comfortable, more valuable, and more enjoyable to live in.

Whether you’re remodeling the kitchen, adding a deck, or finishing the basement, improvements can increase the value of your home—and that often means changes to your homeowners insurance.

Many homeowners don’t realize that renovations can affect both their Insurance coverage and their insurance rates.

• In some cases, your premium may increase.
• In others, you could qualify for discounts.

Here’s what you need to know before you start your next home improvement project.

Why Renovations Affect Your Insurance…

Homeowners insurance is based partly on how much it would cost to repair or rebuild your home after a covered loss. When you renovate, you may increase your home’s replacement value, which means your insurer may need to adjust your coverage limits.

If you don’t update your policy after a major renovation, you could end up underinsured. That means if your home is damaged, your insurance payout may not fully cover the cost of repairs or rebuilding.

Renovations That Often Increase Insurance Rates…

Some projects increase the value of your home or create additional risks, which can lead to higher premiums.

• Kitchen Remodels – A new kitchen with custom cabinets, stone countertops, and upgraded appliances can raise the replacement cost of your home. Since it would cost more to rebuild after a fire or other loss, your insurance rate may increase.
• Bathroom Upgrades – Adding an extra bathroom or installing luxury features like heated floors or custom tile can also raise your home’s value and replacement cost.
• Home Additions – Building a new bedroom, sunroom, or second story adds square footage, which almost always increases your insurance premium because there’s more home to insure.
• Swimming Pools – A pool may make your backyard more enjoyable, but it also increases liability risk. Because there’s a greater chance of accidents or injuries, your insurer may require higher liability coverage, which can raise your rates.
• Finished Basements – Converting an unfinished basement into a finished living space adds value to your home and often requires more coverage for flooring, furniture, and electronics.

Renovations That May Lower Insurance Rates…

Not all renovations increase your premium. Some improvements make your home safer or less likely to suffer damage, which may actually help reduce your insurance costs.

• A New Roof – Replacing an old roof with a new one can lower your rates because newer roofs are better able to withstand storms, wind, and leaks.
• Updating Electrical or Plumbing Systems – Old wiring and plumbing can be a fire or water damage risk. Updating these systems may make your home safer and reduce the likelihood of claims.
• Adding a Security System – Installing burglar alarms, smoke detectors, security cameras, or smart home monitoring systems may qualify you for discounts.
• Installing Storm-Proof Improvements – If you live in an area prone to storms, installing impact-resistant windows, reinforced garage doors, or storm shutters could lower your premium.

Don’t Forget About Construction Risks…

During a renovation, your home may be exposed to temporary risks. Contractors, building materials, and unfinished work can increase the chance of accidents, theft, or damage.

Before work begins…

• Tell your insurance company about the project
• Make sure your contractor is licensed and insured
• Ask whether you need temporary coverage during construction

For major projects, your insurer may recommend increasing your coverage until the work is complete.

When Should You Notify Your Insurance Company?

It’s best to contact your insurer before starting any major renovation. Even projects that seem small can affect your policy. Your insurance agent can help you:

• Update your coverage limits
• Adjust liability protection
• Identify available discounts
• Avoid gaps in coverage

Waiting until after the project is complete could leave you underinsured if something happens during construction.

Home renovations can be a smart investment…

Renovations can also change your insurance needs. Some upgrades increase your premium because they raise your home’s value or add risk. Others can save you money by making your home safer.

Before you renovate, talk with your insurance provider. A quick policy review can help ensure that you and your home improvements are fully protected—and that you’re not paying more than necessary.

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