Renovations Impact Homeowners Insurance Premiums

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Home Improvement

When planning renovations, homeowners usually focus on how changes will make a house safer, more comfortable, and more convenient. They generally give less thought to how those upgrades might affect their homeowner's insurance premiums. If you’re thinking about renovating your house, your insurance rates may go up or down, depending on the types of changes you make and how they affect risk and liability from the insurer’s perspective.

Renovations That Can Raise Your Insurance Premiums 
If you make upgrades that increase your home’s value, you’ll likely see your homeowner's insurance rates go up. That’s because it will cost more to repair or rebuild your house if it gets damaged by a storm, a fire, or another covered peril. If you build an addition, add a deck or patio, upgrade parts of your home’s interior or renovate your basement or attic to turn it into a living space, you should expect to pay more for homeowners insurance. 

Adding certain features, such as an in-ground pool, can raise your home’s value, but it can also make your property more dangerous. A pool is considered an “attractive nuisance” because it’s appealing to children and can put them at risk. If you add a pool, you may have to raise your liability coverage limits, which can cause your premiums to jump. Your insurance company may require you to install a fence around a pool to prevent an accident. That may help you keep your premiums manageable.

Home Improvements That Could Save You Money on Insurance
Some upgrades may lead to lower homeowners insurance premiums. Changes that make your house less likely to become damaged and make you less likely to file a claim can save you money on insurance.

For example, if you replace an old roof, you’ll be less likely to file a claim related to storm damage. If you replace or upgrade old HVAC, electrical, or plumbing features, they’ll be unlikely to break down any time soon, which means you’ll be unlikely to file an insurance claim. 

Notify Your Insurance Company If You Make Home Improvements
No matter what type of upgrades you make, let your homeowner's insurance company know about them. You may be pleasantly surprised to learn that your premiums will go down. 

Even if you expect that renovations will make your homeowner's insurance rates rise, you should still inform your insurer of the changes. If you don’t, you may find yourself underinsured. If your home gets damaged and you have to file a claim, the company may not pay you enough to cover bills for repair or replacement. If you build an addition or a deck and don’t tell the insurance company about it, and then it gets damaged, the insurer may deny your claim outright.