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8 things you need to know about insurance when renovating

Don't wait until after your home is finished to tell your insurer.

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Renovations are exciting, but taking on a big home project isn’t always smooth sailing. Have a conversation with your insurance provider before you pick up the tools to make sure any mishaps along the way will be covered.

The reality of renovating

Whether you’re renovating your own home or an investment property, it’s essential that you understand what is and isn’t covered by your homeowners insurance so you’re prepared in the event of any on-site mishaps. For major renovations, you may need to take out additional insurance — your insurance agent can help you understand the specifics.

If you’re getting ready to renovate, here are the 8 things you need to know before you get started.

1. Tell your insurer that you’re renovating

Your home’s replacement value will likely go up with the renovation and your coverage limits may not be high enough if your home is damaged or destroyed. Talk to your insurance agent about your renovation plans before getting started to find out how and when to update your coverage.

2. Your building materials may not be covered

A standard homeowners policy may not cover building materials like wood, paint and tools. If you’re doing a major renovation, talk with your insurer about whether or not you’ll need a renovation or builders risk insurance policy.

3. You may need extra liability insurance

Find out how you’re covered for liabilities, like if a contractor or friend gets injured in your home, and talk with your agent about whether it’s enough. Renovations increase the likelihood of someone getting hurt, and most standard homeowners insurance policies aren’t cut out to handle that level of liability.

4. DIY renovators may need extra coverage

Some policies won’t cover homeowners undertaking their own renovations. If you are undertaking any part of the renovation project yourself, or coordinating as a project manager, then you may need builder’s insurance. It’s best to check with your insurer to see what they say. Ultimately, who is doing the work doesn’t change the need to contact your insurance company at the beginning of renovations.

5. Your contractor must be insured, too

Homeowners generally aren’t covered against incomplete or defective work if their contractor isn’t insured. If you’re hiring an outside contractor, check that they’re licensed and insured for both liability and workers compensation. It’s a good idea to check the credentials of any subcontractors, too — don’t assume that your contractor will have handled that.

6. Vacancy can void your policy

Living through a renovation can be a nightmare, which is why it’s common to move out while renovating. However, some policies will become void if your home is unoccupied for longer than a specific amount of time, typically between 30 and 90 days.

If you’re thinking about moving out while you upgrade your kitchen and bathroom, you may need to think again. Some policies can lapse after just 30 days. You may be able to request a vacancy permit from your insurer to avoid this.

7. Take pictures of everything

Take before and after pictures of everything, including your belongings and the home itself. Check in with your insurance agent again when the project is finished and make sure they know about any major changes to the home to avoid denied claims in the future. For example, if someone slips on the porch stairs that didn’t exist before the renovation, you could end up with a denied claim.

8. No permits? No insurance coverage

If you don’t have all of the necessary permits for any renovations or constructions, your insurance policy could be void — and your insurer could refuse to pay out any claims. Check, and double check, that you have any permits you need before you get started.

Selling your home after a renovation

If you decide to sell your home, you’ll need to disclose any potential defects or construction projects to the buyer. In many cases, the buyer may be able to sue you if they purchase a home with defects that weren’t disclosed.

To avoid problems, have your home inspected after a renovation and be honest and upfront with potential buyers about any construction work.

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Bottom line

A new renovation is an exciting thing, and it can help increase the value of your home. But before you hire any contractors or start construction, you’ll need to talk with your insurance agent about your plans to make sure you retain your coverage and modify it if you need to.

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