Home improvements are meant to make your home more comfortable and enjoyable to live in, but they may also cause your homeowners insurance premiums to rise. Take that into consideration if you’re planning a renovation project and let your insurance company or agent know about any changes you make to your property.
Renovations and Additions
If you make improvements that raise the value of your home, you will also increase the costs to repair or replace those features if they break down or get destroyed. A new furnace or central air conditioning system, for instance, can make your home more energy efficient. Your insurance policy may cover the system if it breaks down, but the company may also raise your rates.
Dwelling coverage is the amount it will cost to rebuild your home if it gets completely destroyed, for example, by a tornado, hurricane, earthquake or fire. If you remodel your home or build an addition that increases its size and value, you will also increase the cost to rebuild the house. Your homeowners insurance premiums may be raised accordingly.
When estimating the cost to rebuild, the insurance company will consider costs for materials and labor. Factors such as the number of claims filed can affect local construction costs, which can in turn affect your rates for dwelling coverage. A storm that destroys hundreds of homes and businesses in one area may cause construction costs to spike due to increased demand. Insurers may pass those costs on to homeowners by raising rates across the board.
Exterior Upgrades
Making changes outdoors may lead to higher insurance premiums. Building a shed or a detached garage, for instance, can cause your rates to rise.
A pool or a trampoline is considered an “attractive nuisance” or a feature that is likely to appeal to children, but can also pose a risk to them. You may be held liable for an accident involving an attractive nuisance, even if a child trespasses on your property.
You may be required to increase your liability coverage if you add an attractive nuisance to your property. Your insurance company may also require you to install features to protect children from an attractive nuisance. For example, you may have to install a fence with a self-locking gate around a pool or put a net around a trampoline.
Talk to Your Insurer
Speak with your agent or insurance company about ways to keep your coverage up to date and your premiums affordable. If you plan to upgrade your property, or if you have already made home improvements, notify your insurer to make sure you have an appropriate level of coverage in case you need to file a claim. That may raise your premiums, but you may qualify for discounts if you bundle your homeowners insurance with your auto or life insurance policies or if you install safety features, such as deadbolts and a security system.
