If you’re planning a home renovation, your homeowners insurance deserves a spot on your to-do list right alongside your contractor quotes and paint swatches. Renovations can meaningfully change your home’s value, its risk profile, and even your coverage eligibility, so it’s worth knowing what to expect before the first nail goes in. Here’s a plain-language look at what actually happens to your policy when you decide to renovate.
Your Coverage Limits May No Longer Match Your Home’s Value
This is the big one. Most homeowners insurance policies cover your home at its replacement cost, meaning what it would cost to rebuild it. When you add a finished basement, a new kitchen, or a large addition, that number goes up. If you don’t update your policy to reflect those improvements, you could find yourself underinsured if something goes wrong down the road.
Even projects that feel modest, like a bathroom remodel or new hardwood floors throughout, can add real value. We always recommend letting your agent know about significant renovations so your dwelling coverage can be reviewed and adjusted if needed. For homeowners in Ann Arbor, MI, and surrounding areas where property values are higher and remodeling costs follow suit, this step is especially important.
During the Renovation, There Can Be Coverage Gaps
Here’s something a lot of people don’t think about: an active construction zone at your home can create temporary coverage questions. Some policies limit or exclude coverage for damage that occurs while a home is under major renovation, particularly if the home is partially vacant or the structure has been significantly altered. Materials sitting on-site waiting to be installed may or may not be covered, depending on your policy language.
Your contractor should carry their own liability and workers’ compensation insurance. That protects you if someone is injured on the job. But it does not cover your own structure or belongings. Depending on the scale of the work, a builder’s risk policy or a renovation endorsement might make sense for the duration of the project. We’re happy to walk you through whether that applies to your situation.
Some Projects Can Actually Lower Your Premium
Not all renovation news is about higher costs. Certain upgrades can reduce your insurance premium because they lower the risk of a claim. A new roof, updated electrical wiring, modern plumbing, or a whole-home generator can all make your home safer and more insurable, sometimes resulting in discounts or better rates when your policy renews.
If you’re investing in storm-resistant windows or a security system, those are worth mentioning to your agent too. We work with multiple insurance companies as an independent agency, so we can shop your options and see where those improvements are rewarded the most.
Renting Out a Renovated Space Changes Things Too
Some homeowners renovate with the intention of renting out part of the home, whether it’s a finished apartment above a garage or an in-law suite. If that’s your plan, your standard homeowners policy likely won’t cover you for that rental activity. A landlord policy or a specific endorsement would be needed. It’s a common situation, and one where a quick conversation with us can prevent a much bigger problem later.
When Should You Call Your Agent?
As a general rule, contact your agent before you start any project that adds significant square footage, changes the structure of your home, or substantially increases its value. It’s also worth a call if you’re planning to be out of the home for an extended period during construction, since vacancy can affect your coverage in ways that vary by policy.
We’ve been helping homeowners across southeast Michigan and northwest Ohio sort through these questions since 1917. Whether you’re in Monroe, Dundee, Temperance, Ann Arbor, or the surrounding areas, the guidance is the same: a short conversation before you renovate is a lot easier than sorting out a coverage gap after something goes wrong.
If you have a renovation coming up and want to make sure your homeowners insurance is keeping pace, please give us a call or drop us an email. We’re glad to take a look at your current coverage and help you head into the project with confidence.