April 14, 2021
Agency
Update Your Home Insurance for Major Home Improvements
If you are making any changes to your home, it is important to make sure your home insurance policy reflects that change. Home insurance is calculated partially based on your home’s total replacement cost value. This total replacement cost value is how much it would cost to completely rebuild your home after a disaster. When your home has improvements, your home’s total replacement cost value tends to rise. Your coverage should be adjusted to these changes so that you can remain covered.
Home insurance works to protect your home from risks. Yet, the policy must match the risks present to be worthwhile. There are times when updating your policy is essential.
What Type of Home Improvement Projects Can Impact Home Insurance?
Most home improvement projects don’t impact home insurance directly. Painting, installing flooring, or updating lighting is not likely to impact your policy.
However, there are some situations where modifications can impact insurance.
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Increasing the value of the property significantly. Significant upgrades, such as replacing the kitchen, change the value of the home. It is important that the home insurance policy matches the value of the home.
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Adding in larger risk factors. Adding a swimming pool can be a risk factor. Adding an outdoor kitchen with gas can be a concern. If you add risk, you need to update your policy.
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The home’s rebuilding cost is not the same as its for-sale value. Be sure your home insurance covers the value of the home to rebuild. This is important in a total loss situation.
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Enhancing security. Some home improvement projects reduce home insurance costs. Let your agent know about these updates. You may qualify for a discount.
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Adding square footage. Home insurance plans are specific to the home’s current footprint. Update the agent if you add a bedroom. Large-scale projects like this change the value of the home, too.
Updates like this are usually not a problem to make. Don’t tackle a home improvement project that drops the value, though. This could be a problem for your lender.
Keep your home insurance agent informed. Communication like this ensures your policy accurately reflects your need. If you need to make a claim later, you don’t have to worry.
It’s a good time to review your policy. If you have not done so, consider recent home improvement projects.
Do I Need a New Home Insurance Policy for a New Home?
If you are moving from your residence, contact your home insurance agent before you do. You cannot typically transfer a single home insurance policy as every home and its value is different, but you may be able to keep your same insurer. If you are moving to an area where your insurer offers coverage, you may be able to purchase a policy through them without going to a new insurance agent.
There are several key things to discuss.
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Discuss the terms to canceling your existing policy. Don’t cancel the policy until after you are fully moved from your old home. Also make you have transferred all deeds and ownership documents to the new owner. Most of the time, you will need to make a partial payment or receive a reimbursement for time not spent in the home.
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Talk about losses after you move. Let’s say you move out, but someone who visited your home a month prior files a claim for an injury. Your home insurance policy may be no longer in place. Most policies will cover you in claims like this for a specific amount of time even after your leave. Be sure your policy offers that type of protection.
Will My Home Insurance Premiums Go Up After Updates?
If the value of your home insurance goes up, so may your home insurance premiums. This is because the amount of coverage you will need also goes up. There are other factors affecting the cost of your home insurance premiums, however, including:
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Location
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Claims history
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Credit score
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Value of the home
If your premiums go up after an accident or upgrades to your home, ask about other ways you can save money on your home insurance policy.
You can actually save money on certain updates, as well. If you make safety upgrades, this can lower the likelihood of a claim which can save you money on home insurance. This includes upgrades to your roof and anti-burglary systems.
There are several types of discounts available for homeowners including:
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Bundling home and auto discounts
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New home discount
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No claims discount
Categories: Blog
Tags: coverage, homeowners, improvement, insurance, policy, projects