Americans love their home renovations. Creating the perfect space has become a national pastime, and home improvement spending in the U.S. continues to reflect that passion.
But when the COVID-19 pandemic hit, something unexpected happened. The home improvement boom went through the roof! With so many people quarantining and working at home, people have been forced to use their homes more – and differently – than before. Some are remodeling out of necessity, such as adding an office. Many are renovating simply because they have the time and desire to spruce up their dwellings.
How big is the COVID-era home renovation boom?
It’s at an all-time high according to Max Anderson, Chief Economist at Porch.com, an online marketplace that connects homeowners with contractors. More than 75 percent of homeowners surveyed by Porch.com have undertaken at least one home improvement project since the COVID pandemic began, and 78 percent of them are planning at least one project in the next year.
But there’s a lot more to creating the ideal space than just choosing the right materials, the perfect furniture, or the best contractor.
The last thing many homeowners think about when creating their dream space is how their homeowners insurance might be impacted.
In most cases, making renovations to your home will add to its value. But unexpected surprises during the process can put a serious financial damper on your renovation dreams. It’s important to understand how your remodel might impact your homeowners insurance coverage. Here are five tips to help you avoid a costly surprise.
- Talk to your insurance carrier before work begins. If your renovation will increase the replacement cost of your home, definitely contact your insurance company. But contact them even if it’s a minor renovation. They can provide invaluable advice about whether you need additional coverage or higher limits for your project, how the renovations will impact your homeowners insurance, and how to mitigate your various risks. In other words, they can spare you those unexpected financial surprises down the road.
- Make sure you’re covered during the renovation. Are you hiring contractors or doing it yourself? Are you staying in the home or temporarily moving out while renovations are done? These variables can impact your insurance needs and coverage. Also, your homeowners policy likely excludes theft to a dwelling under construction, so you may need dwelling under construction coverage. And if you’re temporarily moving out, you may want to consider vacant or unoccupied homeowners coverage.
- Verify your contractor has current licensing and bonding. Contractors must meet state licensing and bonding requirements. But never assume they’re playing by the rules. Take time to verify that any contractors on your project have current licensing.
- Check your contractor’s insurance coverage. Get a copy of your contractor’s General Liability Insurance Proof of Insurance and verify that the coverage amounts are high enough to cover any losses on your project. Also make sure the contractor has adequate workers’ compensation insurance to cover all workers on your project. You don’t want your homeowners insurance to be on the hook for any injuries to those workers.
- Mind the contractual details. Always ask to be added as an Additional Insured on your contractor’s policy, which gives you additional protections. Request that any Hold Harmless agreements be removed from the contract. And never agree to sign a contract waiving your insurer’s right to subrogate. Failing to mind these details can be extremely costly if something goes wrong.
Thinking of renovating? Call your insurance agent and find out how your homeowners insurance will be impacted. The call could save you a lot of money and headaches down the road.