Your home is the most valuable thing you own, so it should be protected. You need homeowner’s insurance to protect your property and all assets. Basic home insurance coverage protects against interior or exterior damage and loss/damage of personal assets or possessions. More coverage can be added to this, though your premium will likely increase.
The amount you pay for insurance can alter based on countless factors, one of which is the presence of home renovations. Making significant changes to your home can either lower or increase your insurance premium. Before you begin working on your home, this reality is something to consider; the right improvements can help you pay less for insurance, while others will require you to pay more.
Some renovations will cause insurance premiums to climb slightly higher, and there are various reasons for this. Most home improvements that add value to your home can cause premiums to rise. As your house grows in worth, you need a higher level of coverage to ensure proper protection is offered. Other improvements can lead to heightened risks around the home, potentially raising premiums in that regard.
Three renovations that are likely to increase your premiums include, but are not limited to:
Expanding your home in any way will add value to the property and generate a higher insurance premium. For example, insuring a five-bedroom home will always cost more than a three-bedroom home because the property is larger and worth more money, therefore requiring greater coverage.
While swimming pools and hot tubs are great luxury additions to a home, they cause an increased risk of accidents around the property. People might slip and get hurt around the pool or hot tub, meaning liability coverage is necessary for protection if someone is injured on your property. As a result, this increases the premium, as you’re taking out a new type of home insurance coverage.
Building a home office is a popular renovation following the pandemic, yet building a home office can increase your insurance premium. Again, you’re adding value to the property, so your insurance coverage must reflect this. More specifically, standard home insurance plans don’t always cover business assets. If they do, it may only be up to a couple of thousand dollars. You could have lots of expensive assets in your home office, so you’ll need to take out a more significant level of coverage to protect them.
Conversely, many renovations will decrease insurance premiums because they make the home safer or mitigate many common risks. Some ideas to consider include:
Old electrical and plumbing systems are more likely to cause serious problems like fires or water leaks. Upgrading these systems can lower premiums, as modernized systems can reduce the risk of your home sustaining internal damage.
A working security system acts as a deterrent for your home. Data from ADT Security claims your home is 300% safer from break-ins with a CCTV camera than homes without one. Deterring criminals reduces the chances of your home being robbed. This statistic is important to insurance providers, as there is a decreased possibility they’ll have to pay for burglaries. Providers often offer lower premiums in exchange for this safety net.
While replacing the roof is technically a home improvement that adds value to your property, roof replacements are known to drop insurance premiums because they provide better protection for your home. A new roof reduces the risk of water damage and mold. Many insurance providers offer discounts on homeowner’s insurance if you use impact-resistant roofing materials.
Installing a fire suppression system enhances your home’s safety by mitigating the risk of fire damage. A house with a fire suppression system can put out a fire before significant damage is incurred. Insurance providers note any investment into a home to provide prior protection from accidental damages.
An improved HVAC system (heating, ventilation, and air conditioning) means your home is more energy efficient and at a lower risk of potential fire hazards. Old systems are full of dust and outdated connections, meaning fires are shockingly common. Once again, this renovation is designed to mitigate risks around the home, so your insurance premium should reflect it.
Before you embark on a home renovation project, it’s important to consider the following:
Proactive communication with insurance providers before and after renovations is crucial. It ensures you understand how your projects will alter your premium so you can secure the best rates moving forward. Periodically reviewing and updating your homeowner’s insurance is optimal to ensure adequate protection for your property and the assets inside.
For assistance finding the best homeowner’s insurance, reach out to Alpine Castle Lake Insurance today. We’ll pair you with one of our independent insurance agents, who will provide expert guidance and support throughout the entire process.