Your home insurance policy includes a specific type of coverage called "dwelling coverage." The amount of dwelling coverage that you have is based on your overall home value and the approximate cost to rebuild your home in the event of a total loss. When you renovate your home, you may increase its value — and if you don't inform your insurance company, you may be left underinsured.
These are the home improvement projects that could affect your overall value and require you to increase the amount of insurance coverage that you have for your home:
Adding a Pool or Hot Tub
When you decide to install a pool or hot tub in your backyard, you are likely thinking more about the endless days and nights that you will spend relaxing. However, these home improvement projects may increase your home's value — as well as your liability — which may cause an insurance premium increase. It's important to budget for this when you consider the overall cost to install and maintain your new pool or hot tub.
Replacing Your Home Siding
Replacing the siding on your home will have a significant impact on your property's facade. Not only will it boost your curb appeal, but it will also increase the value of your home. The increase in value may be so high that it could leave you without enough insurance coverage in the event of an emergency, so you should inform your insurance company that you are taking on this project.
Upgrading the Kitchen or Bathroom
Kitchen and bathroom renovations offer you the highest return on your investment, as these projects make your home more appealing to potential buyers and can drive up the sale price of your house. Noting the high ROI, it's necessary to keep your insurance company informed when these projects are complete.
Investing in a Home Addition
A home addition, such as a second story or additional living space that changes the footprint of your home, will significantly change the value of your home. This is perhaps the most important project to tell your insurance company about, as you do not want to risk being underinsured after you have finished a beautiful home addition.
In order to fully understand the impact that your home renovation project may have on your homeowner's insurance policy, contact your insurance agent prior to beginning the project. This will give you an idea of the impact that your project will have on your coverage and will allow you to budget for any insurance premium increases that may occur.
About the Author
John Hassler
Our goal is overcoming the housing challenge and getting to know one another, here is a bit about me. Providing you with professional guidance for buying and selling homes stems from an in-depth knowledge of the Twin Cities Best Homes and Neighborhoods. For us, the process is a simple one and starts with a conversation about your needs, desires and concerns. No contracts or promises up front. I ask only for the opportunity to understand your housing needs and have you become comfortable with my real estate knowledge and experience. I have lived throughout the metro area, have sold close to 1000 homes as well as built, remodeled and designed homes. My passion is assisting you in discovering that perfect home, location and setting that will bring you and your family pleasure and comfort for years to come. I would enjoy the opportunity to meet with you at your home, business or over a cup of coffee. I am readily available by email, text and enjoy a phone call as well. Please don’t hesitate to contact me, as I always enjoy a new opportunity to help someone!
