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Do I need extra insurance coverage if I am renovating my home?

You've hired the contractor, approved the plans, purchased the materials, and you're all ready to jump head first into your next home improvement project. Anything you are forgetting?

So often, homeowners are delving into home improvement projects without consulting with their home insurance agent. In the case of a loss, the value that they have added to their home is not covered under their existing policy. In order to protect your home and investment, always be sure to update your coverage to include your latest improvements. Improvements might include but are not limited to:

  • Remodeling a bathroom/kitchen
  • Upgrades to flooring, roofing, countertops, etc.
  • Adding square footage

Before starting home improvement projects, be sure to contact your insurance company to inquire about an update in your coverage. What many homeowners do not realize is that while most improvements will increase their premiums to reflect the change in your home's value, others may actually qualify you for discounts. Such updates would include installing a security system, updating smoke alarms/detectors, upgrading the heating, plumbing and/or electrical systems.

Not only should your updated policy cover the added value to your home after renovations, but it is important to check the insurance coverage of the contractor and subcontractor as well. Ask your contractor to see their workers compensation policy which will pay for the medical and rehabilitation expenses if a worker sustains injuries on the job. Without this policy, you as the homeowner could be held responsible for such expenses in the case of an accident on your property.

In many cases the contractor will subcontract workers that are not full time employees of the contractor and therefore not covered under the contractor's workers compensation policy. You should always check with the contractor and subcontractor for detailed coverage information. If you determine that there is insufficient coverage, consider updating the liability portion of your homeowners policy to cover any expenses incurred in the case of an accident.

Last Updated: July 15, 2009

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