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Homeowners Insurance: Remodeling or updating your home

By Compuquotes Team on May 15th, 2008
Homeowners Insurance

It can be quite exciting when you can finally afford to add on the extra room to your home, renovate the bathroom or update the kitchen. Hiring contractors and purchasing materials is exhilarating as you move towards remodeling and updating your home. However, one of the most important steps that homeowners miss when they are going through the process of a renovation is contacting their insurance company and letting them know that the home is being updated. More than 40 per cent of homeowners do not contact their insurance companies after significantly renovating their homes to update their homeowners insurance policies.

Updates to your home can include:

  • Adding on a new deck
  • Remodeling the kitchen
  • Renovating the bathroom
  • Adding on a room
  • Finishing off a basement
  • And many more.

If you don't update your homeowners insurance policy and you suffer a loss - your insurance may not provide coverage for the improved conditions in your home. However, by notifying your insurance provider of the renovations and remodeling that you are doing, you can be sure that your renovations will be included if there is a loss in your home.

It is best that you update your homeowners insurance before the contractor even enters your home. You should be telling your insurance company that you're having work done in your home to make sure that any losses that are due to error or accident by contractors or workers in your home will be covered. Also, this will also mean that the building materials that are inside your home while the work is being done will be covered should there be a loss.

Renovating and remodeling your home can quickly add to the overall value of your home, and many homeowners fail to update their homeowners insurance to reflect the new replacement value of their home. (Replacement value for homeowners insurance is not the real estate market value of your home, but rather the cost of construction for rebuilding your home where it stands, minus the cost of the land.)

Renovating and remodeling your home can also be quite pricey - imagine finding out after a loss in your home that your insurance company will only pay to replace, rebuild or repair your home to the state it was before you did all the work. The monetary difference of an entire room, an updated kitchen or a new deck could be quite considerable - and unless you've updated your homeowners insurance policy, this could be your significant loss.

Some of your renovations and remodeling could actually save you money on your homeowners insurance as well. Updated security or safety features in your home could mean a discount that you didn't qualify for before, which could lead to substantial savings. Updates to plumbing, heating and electrical systems in your home can also qualify for discounts as well, so be sure to report any change or renovation to your home to your insurance company before the work is started and then clarify and touch base with them again when the work is completed. You will also want to photograph before and after pictures of any updates you've done to your home as well, and it's best to take a photo with a family member in the picture to prove that it is indeed your home.

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