Making a wish list and finding a good home remodeler aren’t the only things you need to do when planning a remodeling project. It’s also important to look into some money matters. Many homeowners don’t realize that a remodel can have an impact on their insurance rates and coverage limits. Depending on the work you’re planning to do, you may need additional coverage.
Understanding the Basics
Whether you’re updating your kitchen or building out to add square footage, a remodel will likely increase the value of your home. Before you start construction, it’s a good idea to contact your insurance agent and ask questions. They may increase your coverage limit to reflect the value of the remodel or the area being renovated.
Your insurer also offers coverage enhancements to add to your policy. An extended replacement cost, for instance, provides an automatic increase of at least 25% of your dwelling coverage limit in the event of property damage. This can be beneficial if you aren’t sure of the accuracy of the suggested coverage limit adjustment.
Also, to ensure a smooth home remodeling process, ask your prospective bathroom or kitchen contractor for a copy of their insurance policy. They should have commercial liability and worker’s compensation insurance to cover potential property damage and worker injuries. By taking these measures, you can rest easy knowing all of your bases are covered.
Projects That Can Increase Your Insurance Rates
Generally speaking, you can expect the following home renovations to increase the value of your home, as well as the cost of your insurance:
- Home additions. Adding extra square footage to a home is a great way to accommodate a growing family. Whether you’re building a whole new addition or simply adding a deck, your insurance will need to be altered to account for the value of the new space.
- Kitchen or bathroom upgrade. Because these projects tend to have a big positive impact on home value, it’s a good bet that they will come with a corresponding increase in insurance costs. The good news is, if your bathroom or kitchen remodeler makes safety upgrades, such as updating your electrical or plumbing system, this may help you qualify for an insurance discount.
- Home office. The same requirement for updating your insurance policy or purchasing extra coverage also applies when adding an office to your home. No matter what type of business you’re in, you need to let your insurer know of any business risks to ensure proper coverage.
Bottom line: most remodeling projects that are worth doing increase how much insurance you’ll be paying. However, the added cost is worth it because you’re also gaining property value, not to mention improving your quality of life and your enjoyment of your home.
Let’s Start a Conversation!
DreamMaker Bath & Kitchen of Ogden is dedicated to providing smart solutions for all your residential remodeling needs. Our distinctive, full-service home remodeling approach focuses on serving clients through all phases of a project, from initial consultation to the day we clean up. Call (801) 614-7263 or fill out our contact form to schedule a design center visit or online consultation. We serve homeowners in Ogden and the surrounding communities of Farmington, Millcreek, Sugar House, Mount Olympus, Cottonwood and many more.
