Homeowners Building an Addition Need More Coverage

Homeowners Building an Addition Need More Coverage

If you are thinking about building an addition on your home make sure you find out what type of additional coverage you need on your homeowners policy.  The requirements differ depending on the type of addition you are building.

Basic Edition-Most additions are just an extension of the living space already occupied by the homeowner and immediate family. In this case, you need to talk with your home insurance agent and increase your dwelling coverage based on the additional square footage you are adding to your home. Your dwelling coverage was calculated using  your home’s original square footage and does not include the space or contents added during your addition.
Separate Quarters
Another common type of addition is an apartment built onto an existing home. These have become increasingly popular over the past few years. Homeowners will typically use these as:

1) A space for elderly parents or adult-children to live under their roof (sometimes called a mother-daughter unit) or

2)  A space to rent-out to tenants

In either event, the type of home insurance policy you need depends on the specifics of the addition.  Your insurance agent will most likely use four criteria to determine whether this addition would be covered under your existing policy- or if it will need a policy of its own (Landlord policy):

• Does the addition have its own entrance?
• Does the addition have its own address?
• Does the addition have its own kitchen?
• Is the addition rented to tenants?

Your answers to these questions will determine whether your insurance company will require you to have a separate landlord policy or not. Regardless, the renters (tenants or extended family) should have their own separate renter’s insurance policy to cover their belongings.

As soon as you know this is going to happen you should contact your home insurance agent to discuss your new/revised policy.