Whether you are buying a new home, or have lived in your property for years, there might come a time when you will want to remodel, repair or build additions to the property in order to make it continue to meet your family’s needs and desires. However, embarking on home improvements or construction of any kind means considering precisely how much risk you are undertaking with the project, and how much value you will add to the home.
By answering these questions for yourself, you will often realize that you need to take some extra steps to insure your property appropriately. After all, changing your home means changing its value, and therefore your existing homeowners policy, might need to be adapted to meet the new monetary and physical liabilities created by the home updates.
Let’s take a closer look at the insurance adaptations that will need to happen when you embark on a home building project.
Why Construction Projects Impact Your Home Insurance
After you buy a home, you naturally hope to be able to sell it for a profit if the need ever arises. Plus, over the years, the ways you use your property might change, and you might need to make adaptations to your home in order to make it continue to meet your needs. In either case, this might mean making a lot of home updates or undertaking new construction from time to time.
Still, doing home improvements is nothing to take lightly. Even if it’s a small, do-it-yourself job, you will still be engaging in a project which, if not done correctly, could cause you a lot more headaches than benefits. As a result of a construction project, you will:
- Make improvements to the home that will increase its value
- Potentially create new safety hazards for your family or visitors
- Work with and manipulate parts of the home (the structure, electricity, plumbing, etc.) that, if not handled appropriately could sustain damage and cause much bigger problems that you didn’t expect.
Regardless of the scope of your project, the biggest loss you might sustain through accidents or unexpected problems is a loss of property value. That’s something that no one wants to have to worry about affording or recovering from.
Unfortunately, unless you make practical changes to your homeowners insurance, you might find that the improvements will not have adequate coverage (if they have coverage at all). Therefore, you will need to talk to your insurer before you start a construction project in order to make sure you never leave yourself with holes in coverage.
How to Adapt Home Insurance to Cover Works In Progress
If you are planning to do home improvements yourself, then you might be cutting out some of the costs of having to hire a contractor. However, this does not mean you have no obligation to protect your own materials, assets and people involved in the project.
Your homeowners insurance can cover the materials that you plan to use during a construction project, as well as insuring the completed project. Still, you must be certain that you increase your dwelling insurance limits appropriately before starting the project in order to insure these items.
Additionally, keep copies of receipts, contracts and photos of works in progress. This can help you validate a claim if it arises during construction. Revisit your home insurer after you complete the work to see if there are any further coverage increases that you need to make.
Plus, keep in mind that you might also need to ensure that you have adequate liability insurance to cover you both during and after the renovations. For example, a friend who might be helping you with construction could get hurt, and request to file for compensation against your own policy. It is your liability insurance that can help you compensate them.
Additionally, if you are adding a structure to your home that will create higher safety risks—I.e. adding a swimming pool in the backyard—then you might have a higher risk of someone getting hurt in your home later. This will also merit adding increased liability benefits to your plan.
Hiring Contractors? Ensure they Are Insured
If you are planning to hire a contractor to do your construction project, then it’s imperative that you vet them appropriately. The contractor is the person who is responsible for seeing your project through to completion, and if they make mistakes, then the duty falls on them to fix the problem. Still, if they aren’t appropriately insured, then their lack of coverage could force you to face the risk of lawsuits or other issues, even if you had no fault in the issue.
Regardless of whether you are embarking on a do-it-yourself project or hiring a contractor, you will need to ensure that your own property insurance is adequate for your needs. At the end of the day, your home insurance must be prepared to address any potential problems with home improvement projects, and it will be there for you long after your work is done.
