Are you planning a major project, such as remodeling, rebuilding or building new? Do you know if your insurance will adequately cover it? These questions are important to answer anytime you hire a contractor to work on your home or property. Make sure you take time to verify that they and any subcontractors are appropriately insured, as well as licensed and bonded. While it’s always a good idea to ask for a contractor’s certificates of insurance, an even better practice is to contact the insurers to confirm coverage. Some experts recommend that contractors carry at least $1 Million in coverage for each insurance type.
Meanwhile, highly-rated insurance providers tell us that you should consider an extra step: get yourself named as an “additional insured” on the contract of general liability policy. This ensures that you are fully covered against liability for damage that can occur during your project, such as workers breaking a water line that causes a neighbor’s property to flood. Getting yourself added to the policy may cost you little or nothing at all. Also, it means that the insurer will alert you if the contractor’s policy lapses.
It’s important to realize that some home improvements can affect your homeowners insurance premium or coverage. For example, a major kitchen remodel could mean that your home would cost more to replace in the event of a disaster than it was at the time your policy was written. Many policies include a replacement cost endorsement that guarantees sufficient coverage to rebuild your home. Be sure that you have replacement coverage and that the amount is in line with the current costs.
Another renovation-related insurance consideration arises if you transform an unused room into a home office. Standard policies rarely extend coverage for accidents, theft, or other hazards that can happen on property used for business. Talk to your insurance agent about extending coverage or buying a separate policy. It’s important to inform your agent or insurer when you make significant changes to your home. Some upgrades, like a replaced roof or updated furnace, can actually significantly reduce your premium!
The typical homeowners insurance policy is not sufficient to cover risks associated with building or rebuilding a home. You may want to take out a builder’s-risk policy to insure your property and on-site building materials during construction.
If you’re in the market for home-related insurance, we can provide you quotes from several different insurance companies that have good ratings from both consumers and from independent rating organizations.
Hicks, A. (2014, December 1). Are you properly insured for remodeling? Vitality, p. 22.