Will Homeowners Insurance Cover a Home Renovation?

Changing seasons and climates can bring snow storms, hurricanes, floods, tornadoes, or forest fires. This means that home insurance is a crucial part of every homeowner’s priorities. These policies can be expensive and complex, which is why home buyers should understand what types of damage their insurance will cover before committing to a policy.

From natural disasters to theft and vandalism, many homeowners find it helpful to secure a policy that helps them prepare for the worst. However, the worst isn’t all that home insurance can cover. For those planning a home renovation or buying a fixer-upper, looking into renovation insurance coverage can be a smart financial investment.

What Is Covered by Homeowners Insurance?

When buying a home, it’s not uncommon for people to be unsure of how much insurance they will really need. While every policy and plan is different, most homeowners insurance will help you repair or even rebuild your home if damage to the interior or exterior comes from:

• Fire;
• Smoke;
• Theft;
• Weather events like hail, lightning, or wind;
• Personal liability (if someone gets hurt on your property).

Keep in mind that if you live in an area where one or more of these natural disasters is common, you may pay higher premiums or need additional coverage. For example, a waterfront property may have higher rates for weather damage due to an increased risk of flooding.

What Is Not Covered by Homeowners Insurance?

When you look for a homeowners insurance policy, it’s helpful to understand what is usually covered, sometimes covered, and rarely covered. While most homeowners insurance policies are fairly expansive, there are several situations that are often not covered with a standard policy, such as:

• Termite and insect damage;
• Mold, rust, or rotting wood;
• Bird or rodent damage;
• Neglect or improper maintenance;
• Earthquakes and sinkholes;
• Identity theft.

It’s also important to remember that your insurance policy likely won’t cover damage due to general wear and tear. For example, your policy may include repairing or even replacing your roof, but only if it is damaged due to a natural disaster. Just because your roof is old and in need of repair because of its age does not mean your policy will pay for it.

Planning a Home Addition or Renovation

If you are planning a home addition, you may be wondering if homeowners insurance covers renovation. Home renovation projects, especially those that include additions, are often costly. For those planning a home renovation, be sure to consider the extra costs of furniture, technology, and decor — these could increase the amount you need your homeowners insurance to cover. That’s where renovation insurance coverage comes in handy.

Home Renovation Insurance Coverage

Will your homeowners' insurance personal liability cover a construction worker who gets injured working on your renovation? What about those DIYers — will your policy cover accidental damage to your pipes from tearing out a wall? Depending on the cost and size of your renovation, you may want to consider adding on a home renovation insurance policy.

It’s important to keep your insurance agent well informed of your renovation or addition plans and progress. First, you could be penalized for not keeping them in the loop. Second, if your agent is updated frequently, they can help you catch any policy gaps you may not know on your own.

Choosing the Right Renovation Insurance Policy

If you work with a licensed, insured, and bonded contractor or renovation company, you’ll find their insurance protects you from liability for most renovation projects without you needing any additional coverage. However, it’s still important to consider how the remodeling project, especially an addition, might impact your current policy, including rates. Choosing the right renovation house insurance can help prevent you from becoming underinsured, which can be financially devastating, especially if mistakes are made when filing a claim.

Additional Homeowners Insurance Add-ons

Because your renovation project may be increasing the size and value of your home, it could also increase the cost to rebuild or repair if your home is damaged during the remodel. Talking to your agent about increasing your “dwelling coverage” rate can help cover mistakes or damage that occurs during a home renovation project. There are several kinds of coverage you can buy and claims you can file when damage occurs during a home remodel.

No-fault Medical Coverage

In addition to liability coverage, you may also want to file a no-fault medical coverage claim if someone is injured on your property during the renovation. While the liability coverage protects you from a lawsuit, no-fault medical coverage can take care of medical bills and copays for the person injured.

Construction Coverage

Keep in mind that construction sites are often targets for theft and vandalism, which can be mitigated by adding “dwelling under construction coverage.” You’ll want to file a claim under this covered loss if materials stored out in the open were stolen.

Add Coverage Before Construction Begins

To limit your chance of renovations stalling while waiting for a claim to process, be sure to add on additional policies such as construction coverage and no-fault medical coverage before the hammer hits the first nail. However, keep in mind that purchasing additional coverage during a renovation can impact the cost of your premiums.

Filing a Claim

Filing a homeowners insurance claim during a renovation project is the same as during a natural disaster. Your agent will help you begin the process, which can be electronic, mail, or a combination of both. Keep in mind that the processing time for a homeowners insurance claim can be anywhere from three to 18 days, according to J.D. Power. The longer the processing time, the longer it takes for your project to be completed.

How Much Does Homeowners Insurance Cost?

When it comes to deciding what kind of coverage you need during a home renovation, the cost of your premiums can be just as important as the amount your policy will cover. Due to many different variables, the cost of homeowners insurance can vary widely, from close to a thousand dollars to several thousand and more, even within the same neighborhood. Some of the factors that can impact this cost include:

• Value of your home;
• State you live in;
• Cost of the renovations or additions you’re planning;
• Age of the house;
• Special features, like swimming pools;
• Your credit history.

There are many options for homeowners insurance, so take the time to explore your options, especially comparing the costs for additional coverage like renovation insurance. Be sure to do your research before you apply for insurance to make sure you’re getting the right coverage for the best cost.