Home Renovation Insurance

Home renovation projects can be time-consuming, stressful, and expensive. Whether you're embarking on a DIY project or hiring a contractor to do the work, there’s a lot of planning to be done.

One of the most important items on your to-do list should be ensuring that the project is properly insured before, during, and after the build.

What is home renovation insurance? How do you know what type of home renovation insurance you need? And most importantly, how much does home renovation insurance cost? You’ll need to include any changes to your insurance coverage in your overall budget.

Here are some basics about home renovation insurance. And when you’re ready to begin your project, start by contacting a local independent insurance agent who can help you get the coverage you need.

What Is Home Renovation Insurance?

Home renovation insurance is a type of coverage that can be added to your homeowners insurance policy. It is a combination of coverage types added to your homeowners insurance that can help protect you during your project. 

What Does Home Renovation Insurance Cover?

Depending on the extent of your project, your insurance agent may make several recommendations on how to adequately cover your renovation by making changes to your existing homeowners' insurance policy. 

First, you may need to add dwelling under renovation coverage or dwelling under construction coverage. This is typically in the form of an endorsement to your homeowners insurance policy. 

Dwelling under renovation coverage typically offers protection for theft and damage to construction materials while they're on your property and while they're being stored or while they are traveling to your home. If the materials are stolen or damaged during the renovation process, this coverage can help reimburse you for the loss. 

This endorsement may also provide foundation collapse coverage. It covers damage to your foundation that can be caused by hydrostatic (water) pressure during the renovation process.

What other changes should I make to my home insurance during and after a renovation?

You'll also likely want to make the following changes to your home insurance policy to cover the increased liability risk during the renovation and the increased value of the renovated area:

• Increase your dwelling insurance and personal property coverage limits. You’ll need to fully cover the value of the new construction, as well as any new belongings (new appliances, furniture, etc.). 
• Increase your liability coverage limits during the renovation. Liability coverage pays for medical expenses and legal defense if someone sues you because of an injury on your property. Increasing this coverage is particularly important for DIY jobs where you might have friends or relatives working with you on the project and subjecting themselves to injuries. A dwelling under construction endorsement often offers additional liability coverage during the renovation. 
• Increase the amount of no-fault medical protection on your policy. This pays for minor injuries if a guest is hurt on your property. This is typically sold in small coverage amounts, usually between $1,000 and $5,000.

If the project includes adding an “attractive nuisance” like a swimming pool, you may need to keep additional liability coverage after construction is completed. In these cases, you might consider purchasing a personal umbrella policy (if you don’t already have one) that provides affordable liability protection beyond the limits of your homeowners policy.

Do I Need Builders Risk Insurance for My Home Renovation Project?

Your agent may recommend builders risk insurance or “course of construction” insurance in some cases. This coverage is often recommended for more significant projects like new additions, new foundations, and so on. It is usually a separate insurance policy, rather than an endorsement to your existing homeowners insurance. 

Builders risk insurance generally protects you from the costs of damage incurred during construction caused by things like wind and rain, theft of materials and equipment (except for contractors’ equipment), and vandalism. 

Does My Contractor Need Special Insurance?

If you’re using a contractor or several contractors for your home renovation project, be sure to verify that each contractor has adequate business liability insurance and state-mandated workers’ compensation coverage.

Ask to see a copy of their insurance policies, and even consider keeping a document or a photo of the policies for your records.

If your contractors are not adequately insured, they or their workers could sue you if they get hurt while working on your project. If a contractor has insufficient coverage or does not want to share insurance information with you, it’s probably best to look elsewhere for a different partner for your project. 

What's more, most insurance companies require contractors to be appropriately licensed and insured in order to approve the dwelling under construction endorsement to your homeowners insurance policy.

What if I Don’t Live in My Home During a Renovation?

Most standard home insurance policies exclude coverage for losses that occur when the home has been vacant for 60 or more days. This may not necessarily apply to houses under construction, but you must find out what your policy will and will not cover if you don’t live at home during a renovation.

In some cases, you may need vacant home insurance. If you need it, it can cover damage caused by vandalism or weather while the home is empty. It can also offer liability coverage if someone is injured on the property while it’s vacant.

An independent insurance agent can help you determine if you need vacant home insurance during your renovation.

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What Does Home Renovation Insurance Cost?

The cost of home renovation insurance depends on the size and scope of your project. If you need to add additional dwelling, personal property, or liability coverage, the associated cost will depend on the extra coverage you purchase.

Essentially, if your project will increase the value of your home or belongings, either by adding square footage or installing higher-priced materials, you’ll need to pay a little more to insure them fully.

Some renovations might help you save some money on your home insurance premiums. If you replace your roof with sturdier materials or install shatter-resistant windows and storm shutters, you may see a decrease in your home insurance costs because these items reduce your risk for storm damage. 

Adding other items like smoke detectors or burglar alarms, or updating heating, plumbing, or electrical systems, might also make you eligible for specific discounts from your insurance company.   

How Can an Independent Insurance Agent Help Me Find Home Renovation Insurance Where I live?

Whether you’re adding on an entire room or renovating your kitchen, your current homeowners insurance may be insufficient to cover your home during and after a renovation. It’s important to talk to an independent insurance agent before you start any work, so you can be sure you’re covered during the entire process and so you can be sure to include any increased insurance costs in your project’s budget.

An independent insurance agent in your community can help you understand home renovation insurance and get you quotes for the coverage you need.