Don’t Forget About Home Insurance When Remodeling
Posted on Thu, Jul 28, 2011
You’re finally ready to make some big changes to your home and can’t wait to get that remodeling project underway. Before the walls come down, make sure you evaluate your home insurance coverage.
So often, homeowners dive into home improvement projects without consulting with their home insurance agent. In the case of a loss, the value that they have added to their home is not covered under their existing policy. In order to protect your home and investment, always be sure to update your coverage to include your latest improvements. The National Association of Insurance Commissioners (NAIC) recommends reviewing your home insurance policy, whenever significant work is done on your home. Improvements might include but are not limited to:
- Remodeling a bathroom or kitchen
- Upgrades to flooring, roofing, countertops, etc.
- Adding square footage
Before starting home improvement projects, be sure to contact your insurance company to inquire about an update in your coverage. What many homeowners do not realize is that while most improvements will increase their premiums to reflect the change in your home's value, others may actually qualify you for discounts. Such updates would include installing a security system, updating smoke alarms/detectors, upgrading the heating, plumbing and/or electrical systems.
It's not just your home's higher value that should figure into your insurance calculations. Whether you do the job yourself, or hire a contractor, also affects your insurance needs.
If you hire an outside person or firm, you should find out if the contractor has adequate insurance coverage before work begins. Ask your contractor to see their workers compensation policy which will pay for the medical and rehabilitation expenses if a worker is injured in your home. Without this policy, you as the homeowner could be held responsible for such expenses in the case of an accident on your property.
Contractor's liability insurance covers the contractor for damage to your property while it's under construction. For instance, if there's a big hole in an outside wall and the contractor fails to cover it properly during a rainstorm, water could leak in and cause major damage. Though homeowners insurance will cover these damages, your insurer will expect the contractor's insurance company to pick up the tab if you make such a claim. A reputable contractor will have this coverage and should provide proof of insurance.
For the do-it-yourself home-repair guru, your insurance needs depend on who's helping you and whether you're paying them. A friend or family member who's injured while lending a hand will have his medical bills covered by your homeowners policy.
Hiring a subcontractor or paying a friend makes you an employer. That means you should purchase workers compensation insurance to cover your liability in case of an injury.