Are you planning to remodel your kitchen, create outdoor entertainment space or add on an extra bedroom to your home? For all the money homeowners spend on maintaining their property and expanding their equity, few pay attention to the insurance protections they need during a home remodel.
Any improvement you make to your property may add to its value. Not only will you want to speak with your insurance agent about coverage for your remodel project, but you will also want to review your coverage limits to ensure your homeowner insurance policy will protect your new additions.
5 Tips to Improve Your Insurance Coverage During a Remodel
Here are 5 tips to discuss with your Atlas Plus Insurance agent so that you have adequate coverage during and after a remodel project. Protect your property, your contractors, special tools and everyone involved from physical harm.
1. The Real Added Value of a Remodel & Modify Your Homeowners’ Policy
The first item on the agenda should be to determine how much the remodel will increase the value of the property. In most cases, insurance only covers 80 percent of replacement value of your home and a remodel may have added 25 percent to the value. It may be time to think about raising your homeowners insurance limit before you start the project.
Rather than simply add on the extra value, ask a contractor or trusted appraiser what would be the cost to build the home – with the added improvements – from the ground up. That’s the amount that needs to be insured because that’s what it would cost to replace the loss.
2. Building Codes & Proper Permits
Before you begin a major home remodel, be sure that you plans meet local building codes. Check with your local city planners office for blueprint approval and notification of any requirements to bring the property up to code. Once work is completed, you will insurance policy may not cover damages that occur during the project.
3. DIY Remodels & Personal Liability
If you plan to complete your renovation yourself (or with the help of volunteer labor from friends and family), understand that you are assuming all the risk for liability and property damage. If you pay friends or subcontractors to help perform labor, the homeowner can be liable for workers’ compensation payments when they’re injured on the job. If no one is being paid, the liability portion of your homeowners insurance should cover expenses if someone gets hurt.
You may also want to consider purchasing umbrella liability coverage which kicks in when a claim goes above your typical homeowners limits.
4. Contractors Insurance & Bonds
Before you hire a contractor to remodel your home, ask for proof of the necessary insurance coverage required for themselves and all of their employees, including workers’ compensation insurance and contractor liability coverage. If your general contractor delegates some of the work to subcontractors – for example, an electrician, plumber, painter, or other specialist to handle a particular area of the job – ask for proof of workers’ compensation (for injuries) and contractor liability insurance (for property damage).
Examine each subcontractor’s certificate of coverage for workers’ compensation insurance yourself to ensure the coverage is adequate. And if the amount of coverage is inadequate, contact your agent about extending the limits of the liability portion of your homeowners policy
Tips for Working With Contractors on a Remodel
- Keep copies of any contractor contracts and insurance certificates
- Keep receipts for any materials purchased and add the information to your home inventory
- Take photographs before, during, and after the remodel project so you have a visual record of all work
Once the remodel is underway, you will also need to consider protection for the tools and building supplies (such as such as carpeting, tiles, plumbing fixtures or lumber) your contractor uses to complete the job. Ask your Atlas Plus agent if your homeowners insurance or the contractor’s business insurance covers theft or vandalism of materials for your project while they are stored on your property. If not, find out how to add coverage for valuable tools and materials.
5. Accident Prevention
While it is important to have adequate insurance coverage when undergoing a major remodel on your home, you should also take steps to manage risk during the project. Avoid accidents or injuries to contractors and family members by confining and maintain a clean work area. Locate all power and water shut-offs. Ensure proper safety and first-aid equipment is available. And keep valuable tools, materials and uninstalled items in a secure place (preferably with a lock).
When in doubt, speak with an Atlas Plus Insurance agent to ensure you home and home remodel project is properly insured. Raise your limits (if necessary) and ask about any discounts for safety, energy and security mechanisms added which reduce your risk of triggering a claim.