As today’s housing market creates supply and affordability challenges, remodeling has become increasingly popular. There are many details to consider in the remodeling process. However, there is one detail that many people overlook: the insurance implications.
A general homeowner’s policy covers the owner for covered losses that occur during the normal course of owning and living in the home. Once that home is a construction site, standard policy coverage has limitations that can cause the owner both financial and emotional distress if a loss occurs during the process.
When remodeling your home, it’s easy to get involved in choosing the design and construction details, but it’s important not to overlook the insurance coverage. Here are some important things to remember:
1. Notify Your Insurance Company
Advance notice: Notify your insurance company before starting any major repairs. This ensures that your policy remains valid and that you are covered for problems that may arise during the renewal process.
Scope of Work: Provide detailed information about the renewal rate. This helps the insurer understand any emerging risks and adjust your policy accordingly. Also, it gives them the opportunity to define integration limitations during construction.
2. Review Coverage Limits and Exclusions
Policy Limitations: Check whether your current policy limits are adequate for the increased value of your home after repairs. Increases in home value often require revisions to coverage limits.
Exclusions and Limitations: Be aware of any emissions related to construction or maintenance work. Some policies may have specific exclusions for damage that occurs during repairs or may limit coverage for certain types of work.
3. Consider Builder’s Risk Insurance
Special Installation: For major renovations, builder’s risk insurance (also known as a building insurance policy) may be required. This policy covers property damage during repairs and usually provides more comprehensive coverage than a standard homeowner’s policy. Theft of materials used during construction, which is the number one loss that occurs during construction, is often covered by a Builders Accident policy.
4. Understand the Categories of Spaces
Status of Residence: If your maintenance job means you can’t stay at home, check the vacancy clause in your policy. Most policies have limits on coverage if the home is not occupied for a long time.
5. Protect Your Assets and Liability
Asset Protection: Make sure your policy provides adequate coverage for potential damage to the property, whether it’s due to accidental damage during construction or other unforeseen events.
Credit Coverage: Make sure your liability coverage is adequate in the event of accidents involving contractors or visitors to the site.
6. Write Everything
Before and after photos: Keep detailed records of the building’s condition before and after repairs. This can be useful if you need to file a repair-related claim.
7. Contact Your Insurance Advisor
Expert advice: While this should be the first bullet point, discuss your remodeling plans with your insurance advisor to ensure that all aspects of your policy are addressed. They can provide guidance on adjusting your coverage and any additional insurance needs.
By addressing these insurance considerations, you can focus on enjoying the renovation while protecting your investment and avoiding unexpected setbacks.
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