One of the many responsibilities of a homeowner is to ensure that their home is being maintained and, if they can, increase the property’s value during their duration there. One of the best ways to increase not only the comfortability of your home but also its value is to expand or renovate current areas of the home. Although this may seem like a no-brainer, there are some concerns that homeowners tend to have about this type of financial move.
One of their most common concerns is about their current home insurance policy. Home insurance is there to protect you from mother nature, accidents, and thieves. However, your coverage will be affected by major home renovations. The type of home renovation you’re doing can affect your insurance rates. Some will raise your rates while others have the potential of lowering your rates. Read on to learn more about renovations and how they can affect your home insurance policy.
Renovations That Can Increase Your Insurance Rates
Any time you’re adding more usable space to your home, your insurance rates will likely rise. This is because you’re adding extra space that now also needs to be covered. This could include adding a home extension, finishing the basement, installing a deck, or converting an attic.
Some renovations raise your insurance because they increase the potential for accidents or injuries. For example, if you’re thinking of adding a pool to your backyard, your insurance company may see it as an added risk and thus push your premiums even higher.
Renovations That Can Decrease Your Insurance Rates
However, some renovations can help lower your insurance rates instead. These are usually going to be changes that make your home safer or decrease hazards. For example, if you’re replacing your roof, you’re reducing the chances of it collapsing or leaking and damaging the rest of the house. You’re also making your home more energy efficient.
Similarly, if you update the wiring or plumbing in your home to meet modern standards, you’re decreasing the chances of a fire or flood in your home. Your home insurance company may be willing to give you a discount because you’ve reduced hazards in your home. This, of course, puts any insurance company at ease about having to pay for future damages.
Consider This Before Your Home Renovation
One of the most common mistakes made by new homeowners is insuring a home that is not in the best condition but was purchased for the sole reason of preparing and upgrading it into their ideal home. The fact is that if a home is in disrepair and has been abandoned for many years, it can drastically increase how much you have to pay per month. That is why real estate experts suggest insuring your home until after the renovations have been completed and then updating your home insurance policy. Note that there are certain plans that can be purchased solely for the protection of materials and other incidents during home renovations.
As you can see, there are several factors that need to be taken into consideration before beginning any type of home renovation on your property. That is why it is highly recommended to double-check your coverage and agreements with your current home insurance company before any renovations begin.
