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Renovations Can Impact Your Insurance Premiums & The Claims Process

renovations can impact your insurance premiumsHave you considered the impact home renovations could have on your insurance? As much as we look forward to the finished product, renovations can already feel like a stressful project. There’s a lot of work that goes into planning them, finding the right contractor, and then enduring the actual work. But if you haven’t fully found out what those renovations could mean to your insurance, you may want to put them on hold until you understand all of the implications.

This guide will help you prepare for the impact renovations could have on your home insurance policy.

Tell Your Insurance Company About Renovations

When you’re planning a major home renovation, it’s essential that you inform your home insurance company. You are changing what that policy covers, and if something happens before you’ve updated your policy, the insurance company has a reason to reject all or part of your claim.

Good renovations can increase the value of your home. It also changes the materials and costs that would go into repairing your home if it was damaged by fire or an extreme weather event. But there are also renovations that can actually reduce your premiums, and it’s worth exploring them if you’re planning a major renovation.

Getting Help with a Complicated Insurance Claim

There are many reasons a home insurance claim can become complicated. In a major loss, the sheer value of the claim can lead to frustrations when the insurance company is not communicative or when they make a low offer.

Denial of your claim, in whole or in part, can be caused by unreported renovations or by a lack of upkeep.

If there has been an honest misunderstanding, or you believe your claim has been wrongfully denied, it may be time to hire a public adjuster or an insurance claims lawyer. Either can help you with the entire claims process, though an insurance claims lawyer may be more useful if there is a serious dispute with the insurer. As they are knowledgeable and have experience with contract law, insurance claims lawyers are capable of pursuing legal action regarding your claim.

Renovations That Increase Your Insurance Premiums

Some renovations will require you to increase your insurance premiums. These are usually projects that add to the material and labor costs of your home without reducing the risk that the homeowner will have to file a claim. Some of those renovations include:

Building a Swimming Pool

Swimming pools increase the liability risks of your home, as they make it more likely that someone might hurt themselves on your property and force you to file a liability claim.

Extra Square Footage

Building an addition to accommodate an expanding family adds to the material costs of repairing your home in the event of a fire. Finishing a basement may not add any additional square footage, but it also increases the costs of repairs, and you may want to consider an add-on such as sewer backup coverage.

Adding a Home Office

Now that more and more people have the freedom to work from home on a permanent or part-time basis, the home office is an increasingly popular addition. While the insurance implications of working from home for another company are still a bit unclear, insurance for a home-based business is often a must. This is especially important if you are going to have clients on the premises or you need to insure expensive business tools.

Fortunately, you don’t need a complex commercial insurance policy and should be able to get a simple add-on to your existing home insurance policy.

Renovations That Reduce Your Insurance Premiums

Not all renovations will wind up costing you more money. You can actually get a discount on your premiums for some renovations that reduce the risks of fire, damage from the elements, or accidents on your property.

Replacing Your Roof

Renovating your roof or building a new one is a lot of hassle for one of the less exciting parts of your home, but your roof provides critical protection to your home. Upgrades such as fire-resistant roofing materials, impact-resistant shingles, and waterproofing can lead to significant discounts. Tailor your upgrades to the risks local to you.

Plumbing and Wiring Upgrades

When it comes to internal risks, plumbing and wiring are the top offenders for water damage and accidental fires. Older plumbing and wiring systems are often the culprit for considerably higher premiums, as they come with higher risks. Some old systems, such as knob and tube wiring, may have to be replaced before an insurance company will even consider insuring the property.

Updating plumbing and wiring systems so that they are up to code and reflect modern safety standards can lead to a substantial discount in premiums.

Before you start your next renovation project, make sure you know the full implications of your insurance. While some projects can raise your premiums, others can provide you with a discount. Either way, you should always inform your insurer about changes to your home.

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