Home Insurance After Renovations: Impact on Premiums & Coverage

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Even if you’re doing renovations on your own and not hiring any outside help, you may need to tweak your home insurance policy to reflect the changes you’re making. In some cases, your home insurance premiums may increase but in other cases, you’ll be awarded a lower rate due to the changes you made.

As a rule of thumb, always tell your insurance company about any changes you plan to make to your home so you’re not in for any surprises if you ever have to file a claim, either during or after construction. It’s always better to make changes to protect your home before any event occurs, rather than finding out afterwards that you’re not covered.

You may need supplemental insurance during renovation, in case something goes wrong. Imagine having to pay for damages if the structure collapses or if someone robs all your building materials? Here’s everything you need to know about how a renovation affects your homeowners insurance policy.

Key Takeaways

  • Your renovations may increase the value of your home and rebuilding costs alot or a little.
  • How much you increase your home value and rebuilding costs will determine your premium and coverage needs.
  • You may save money by upgrading your home with increased safety and fire protection.

Will Home Renovations Increase My Homeowners Insurance Rate?

In some cases, your home insurance after renovation may increase if your renovations increase the rebuilding cost of your home and your personal property coverage needs if you buy new appliances. However, your rate may stay the same and in some cases (see the section below), your rate may decrease because of certain updates or improvements.

Your rate may increase if you add something to your home that increases risk, like a swimming pool or trampoline. If you are building an addition to the home, your premium may increase to cover more property, but your rate will stay the same.

If you are building a home office, there are few things to consider. First, make sure that business-related property damage is not excluded in your homeowners insurance policy. Next, find out how much is covered (it typically maxes out at around $2,500, if there is coverage).

You may have to consider buying a business insurance policy if you’re running a business out of your home or you may need to buy extra coverage to protect all business property, but you do not need a business policy if you simply work remotely for another business. If you are using the company’s equipment, they should be insuring this property, not you.

Home Improvements To Lower Home Insurance

Safety discounts may apply after you renovate a home. You will see a discount if you get a new roof as well as if you update the plumbing, electric wiring and/or HVAC systems. A new water heater may save you money on gas and electricity.

If you upgrade your security systems, gas detectors and smoke alarms, you may see a discount. If you have a pool, trampoline or other attractive nuisance, building a fence around it may lower your rate and payments too.

Homes with sprinkler systems indoors also get a break in premiums because they mitigate fire damage.

As a wrap up, here are some upgrades that can lower or increase home insurance:

Home Insurance Decreases

Home Insurance Increases

New roof

Adding a swimming pool, trampoline or other high-risk outdoor attractive feature

Wiring upgrades

Additional square footage to the home or other structures

Plumbing upgrades

Adding an office for a home business (you’ll need a business endorsement or separate business policy)

New HVAC system


New water heater


Indoor sprinkler system


Building a secure fence around an existing swimming pool, trampoline or high-risk attractive feature


Does Homeowners Insurance Cover Home Improvements

Home insurance is not intended for home improvements but to restore your home to its existing condition after an unforeseen incident that causes severe damage, such an extreme storm, fire or burglary. Any upgrades that improve the features or materials of your home would come out of your own pocket, but you may become eligible for a discount, depending on the improvements..

When Do You Need To Increase Home Insurance Coverage?

If you’re adding to your home’s main structure, moving walls or finishing a basement, you may need what’s called a builder’s risk policy or an “under construction” endorsement because the job will be extensive and may entail some risks that will not be covered by your existing policy.

After completion, you’ll need to readjust your replacement value for the home for a higher one. Remember that your Coverage A on a house is only for the main structure and any attached structures. If you built an unattached structure, add the rebuilding cost of it to the other-structures coverage in your policy.

Increase the liability portion of your policy, if you’re adding a feature that increases risk, like a swimming pool. Consider an umbrella policy too.

In short, revisit all coverage to see if you’ll need a bigger payout if the newly renovated home needs to be rebuilt to include the additions or renovations.

How To Increase Home Insurance Coverage After Renovations

Consider what it cost you to build an addition or to replace the systems. Whatever it is you did in home improvements, you’ll probably have to do it again, if a disaster strikes and destroys your home. This means that you’ll need that much more in coverage from your home insurance policy, so it’s important to look at the numbers anew.

  1. See what your coverage A, or dwelling coverage, limit is. Does this number have to change, based on your renovations? Or, does it fall under “other structures”? In both cases, you’ll probably have to increase your home insurance so keep the receipts for all the work you did or had done and add that to your coverage limit.
  2. Contact your insurer. It’s a good idea to also contact your insurance company and review your numbers with the agent to see what they think. You don’t want to be underinsured, so take your time figuring out what your limits should be. Also, tell the insurer what the timeline is for the renovation project(s).
  3. Provide copies of permits. Your insurer will want these, if your rebuilding efforts are extensive and require permits. They may also require before-and-after photos of the home.
  4. Increase your limits. Ask your insurance agent to increase your coverage or do it yourself using the insurance company’s website or app. Your rate may not even go up as much as you fear. Whatever the increase is, it’s better to pay more each month than have to pay for yourself if everything is destroyed.

Consider Adding These Insurance Coverages, if They Apply

Vacant Home Insurance

If you leave your home vacant for more than 30 days on a regular basis, it’s important to have vacant home insurance coverage, which is appropriate to many second homes.

Commercial Landlord Insurance

If you’re renovating a home that you’re renting out, make sure you have landlord insurance, not homeowners insurance.

Renovating a Fixer Upper

With a fixer-upper, buying insurance is a bit more challenging because it's probably a higher-risk investment than a home that's move-in ready. The process of fixing up a home carries higher risks, too, such as on-site injuries and damages.

Before getting quoted, get the property inspected. It will provide you with an accurate estimate of how much work needs to be done.

Chances are that if the fixes are not extensive and you'll be able to move in within 30 days of closing, you can get a standard or conventional home insurance policy. If your home's fixes require that you live outside the home for a few months, you'll probably need a higher-risk insurance plan or a builder's risk insurance, the most common type of new construction homeowners insurance.

When completing renovations, snap before and after pictures of your home. Take pictures of every phase of the project. It will help you document the work and provide proof of the rebuilding costs to your insurance company if they need it. These are critical steps to take no matter the size or the cost of the improvement.

What if I'm Doing My Own Renovations?

Your property will still be a potential hazard to visitors or family members while under construction, so make sure you have adequate liability coverage and consider increasing limits or buying an umbrella policy because you'll be liable for injuries and losses (lawsuits).

Get a Free Homeowners Insurance Quote Today!


Can you eliminate mortgage insurance after home improvements increase the home’s value?

If your home improvements increase the value of your home and reduce your loan-to-value ratio below 80%, you may be able to request the removal of mortgage insurance.

Do solar panels increase home insurance premiums?

If the solar panels are attached to your home’s structure, you may be able to cover them as part of your coverage A and your premiums may increase. If they are unattached, they may be covered by the other-structures portion of a policy. Some policies, however, exclude solar panel damage or they must be insured by the solar panel leasing company.

Will homeowners insurance cover the contractor?

You are not responsible for the contractor's insurance but you should make sure they carry general liability insurance, property insurance and worker’s compensation. If they do not have workers comp for their crew and someone gets hurt or a third party’s property is damaged, the responsibility may fall on you if the contractor is uninsured or underinsured. 

Do I need to buy builder’s risk coverage for major construction?

Builders risk insurance  protects materials you purchased to be installed on your property or en route to your property, in case of damage or theft. Builders risk insurance would cover the costs of material replacement.

Get a Free Home Insurance Quote Online Now.