Home Insurance and Home Renovations: How to Update Your Policy

Your home is likely one of the most expensive and significant investments you’ll ever make. This makes home insurance an essential purchase, as the right coverage can make all the difference in ensuring you can rebuild, repair, restore or otherwise maintain your residence. However, home insurance can prove insufficient if not properly revisited and adjusted. After significant changes, such as home renovations, you must ensure your policy remains adequate.

Why Do Renovations Require Updating Your Policy?

Even if you were meticulous and worked with an expert-level insurance professional to craft your home insurance policy, there may be times when your coverage could be inadequate. That’s because, like many facets of your life, your home may change over time.

Choosing to renovate or add to your home may add significant value to your property, making previous policy details unable to adequately protect your home. Consider if your home was valued at $500,000 when you purchased it, and you tailored your home insurance policy accordingly. While sufficient at the time, if you proceeded to renovate your kitchen, finish your basement or build an additional wing onto your home, it could significantly increase its value. But without adjusting your policy, you’d still only be eligible for up to $500,000 in aid, meaning outstanding expenses would need to be paid out of pocket.

You should also be mindful of the 80% rule as it pertains to your home and adding value to it via renovations. The 80% rule generally states that insurance carriers will not offer full reimbursement for covered losses if you do not carry coverage equal to or over 80% of the estimated full rebuild cost. By renovating your home and adding to its value, you may violate the 80% rule, potentially leading to even greater out-of-pocket expenses following incidents that would otherwise be covered.

Some changes to your home may also require you to revisit parts of your home insurance not directly related to its physical features or monetary value. For example, if you install a swimming pool or playground equipment on your property, these features may require you to increase your liability coverage limits. That’s because even if someone uses your pool or enters your property without permission, you could be sued if they’re injured while doing so. The addition of such features may require you to revisit this part of your policy.

How Can I Adjust My Coverage?

Contact Wilson-Southland Insurance today to learn more about your coverage options and ensure your home remains suitably covered.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.