If you’ve ever embarked on a home remodeling journey, you know the thrill of watching your dream home take shape. Whether it’s a kitchen remodel, a bathroom overhaul, or a full-blown home expansion, every remodeling project is a testament to your vision and investment in your property. Before starting a major remodel you’ll want to consider if builders risk insurance is right for your project. Later, when construction is complete, it’s important your investment is fully protected. That’s why we’re shedding light on the crucial steps of purchasing builders risk insurance and updating your homeowners insurance post-remodel, too.
Why Update Your Homeowners Insurance?
All insurance is a protection against possible loss, effectively lowering your risk of financial hardship from unexpected expenses. With a big financial undertaking like a home remodel, lowering your risk is generally a smart financial choice. After all, this may be one of the biggest expenses you have in your lifetime.
During construction you may want to protect your property from unexpected events that are not covered under your general homeowners policy. After construction, you may want to protect your new or altered property that is now worth more. Due to the excitement of remodeling, these administrative tasks are often overlooked by homeowners, but they should not be overlooked.
Builders Risk Insurance Before Remodeling
Picture this: you’ve just started a remodel and your home is partially demoed. Thieves decide to break in and steal your belongings stored in the basement or damage your home in some way. Unfortunately, a typical homeowners insurance policy does not cover the property if you are not residing in it, or may not offer the same coverage of the property during a construction project. If a fire accidentally breaks out or a wind storm damages your under-construction home, that is not typically covered under a normal policy either. Instead, most insurance companies offer supplemental insurance called builders risk insurance.
Builders risk insurance policies, also known as construction insurance policies, vary from one provider to the next. Coverage may include:
- Fire or lightning
- Wind
- Hail
- Vandalism
- Theft
- Property damage
- Arson
- Collapse
- Vehicle collisions
- Comprehensive general liability
- Back up of sewers, drains or sumps
- Materials stored on-site, off-site, or in transit
- Documents and data
- Fees, penalties, and taxes
- Cleanup costs
Earthquakes and flooding are not typically included in these policies, so it’s important to speak with your insurance company if those events are of concern to you. Make sure you understand exactly which scenarios you are covered for, and which will be out-of-pocket expenses.
Despite the name, builders risk insurance is not just for builders! A reputable contractor will have their own insurance protecting against some or all of these events, but that insurance may not extend to the homeowner. It’s a good idea to have a conversation with your contractor prior to construction to know what will or won’t be covered in case of loss of damage, and to decide whether or not remodeling insurance is right for your project.
Homeowners Insurance Assessment After Remodeling
Most homes undergo some form of remodeling in their lifespan. Small updates like paint and a new dishwasher may not warrant a call to your insurance company, but many larger renovations and remodels do. Maybe your living room now boasts panoramic windows framing the stunning Puget Sound, or perhaps your kitchen has transformed into a chef’s paradise with top-of-the-line appliances. These enhancements not only elevate your quality of life but also increase the value of your property. To ensure these investments are protected, updating your homeowners insurance is a must.
Keep in mind that not all home upgrades will increase premiums. Some may actually lower your payment! Upgrades to major systems, like plumbing electrical, can make your home safer and thus lower rates. Regardless, you want to make sure that your coverage aligns with the true cost of rebuilding your home with the new level of finishes and features you’ve chosen.
Common Remodeling Projects that Warrant an Update
Common projects that warrant a check-in with your insurance agent include:
- Kitchen Remodel: Kitchen remodeling is one of the most popular remodeling projects. Upgrading appliances, countertops, and cabinetry can significantly increase the value of your home. Make sure your insurance covers these improvements.
- Bathroom Remodel: A spa-like bathroom retreat can be a game-changer. Updated fixtures, high-end finishes, and smart technology are valuable additions that should be reflected in your policy.
- Basement Conversion: Converting your basement into a functional living space not only adds square footage but also increases the overall value of your property. Ensure your insurance reflects this upgrade, especially if you’ve added more bedrooms and bathrooms.
- Home Additions: Whether it’s an extra bedroom, a home office, or a second story, adding square footage can increase your home’s worth substantially. Properly insuring these new spaces, and including the square footage in your total square footage count, is vital.
- Roof Replacement: A new roof not only improves the aesthetics of your home but also safeguards it from the elements. Replacing a roof with better materials usually means a reduction in premium. Make sure your insurance accounts for this upgrade.
- Energy-Efficiency Updates: Going green with energy-efficient windows, insulation, or HVAC systems not only reduces your environmental footprint but can also lead to insurance discounts. Be sure to inform your insurer.
- Rewiring Electrical: Replacing knob and tube wiring reduces risk of fires and electrical damage. This often lowers a homeowners insurance premium substantially.
- Smart Home Integration: Incorporating smart technology can enhance security and convenience. Likewise, home security systems and sprinkler systems are particularly well-known for earning homeowners a discount.
Steps to Update Your Homeowners Insurance
- Document the Changes: Create a comprehensive list of all the improvements made during the remodeling. Include details like materials used, square footage added, and the estimated value of each upgrade.
- Schedule a Meeting with Your Insurance Agent: Reach out to your insurance agent or provider to discuss the changes made to your home. They will guide you through the process of updating your policy.
- Request a Reevaluation: Your insurance provider will likely conduct a reevaluation of your property to determine the updated replacement cost. This ensures that you have adequate coverage in case of any unforeseen events.
- Discuss Additional Coverage Options: Depending on the extent of your remodeling, you may need additional coverage. This could include coverage for valuable personal property, increased liability limits, or even a rider for specific high-value items.
- Consider Discounts and Bundles: With your home now upgraded and potentially safer, you might qualify for discounts. Additionally, bundling your homeowners insurance with other policies like auto or umbrella insurance can lead to cost savings.
Just after the completion of a major remodel is the perfect time to shop around for the best coverage and rates. Since you’re already checking in with your current provider, it doesn’t hurt to get a few new quotes for comparison. Insurance companies use special valuation tools to determine how much minimum coverage you need and give you options for varying levels of coverage.
Embarking on a remodeling journey is an exciting endeavor, and watching your dream home come to life is truly a gratifying experience. However, it’s equally important to protect your investment. By updating your homeowners insurance post-remodel, you’re ensuring that your property and all the remodeling you’ve done are adequately covered.
Remember, we’re not just about transforming spaces at our design-build remodeling company; we’re committed to helping you safeguard your investment. If you have any questions about the remodeling process or updating your insurance, feel free to reach out.
