Home improvements are a fantastic way to increase the functionality, aesthetics, and value of your home. But did you know that these enhancements could also impact your home insurance policy?
This post will explore why informing your insurance company about any home improvements you make to your property is crucial.
WHAT’S THE CONNECTION BETWEEN HOME IMPROVEMENTS & HOME INSURANCE?
Home improvements can significantly enhance the value of your home. As you increase the value of your property through enhancements, it’s important that you also evaluate your home insurance policy to ensure you've got sufficient coverage.
Suppose you purchased your policy when your home was valued at $200,000. If you’ve made significant improvements worth $50,000, your policy may not be comprehensive enough to cover the new value. In such situations, it's essential to review your policy, adjust it, and make sure that you have enough coverage to protect your home against potential damages and specific risks.
Making the necessary revisions to your home insurance policy is a responsible way of securing your investment and protecting your home and everything in it.
3 TYPES OF HOME IMPROVEMENTS THAT CAN IMPACT YOUR HOME INSURANCE
Not all home improvements will significantly affect your home insurance. Here are some examples of improvements that may require an update to your policy:
- Renovations and extensions: Adding a new room, upgrading your kitchen or bathroom, or finishing your basement can significantly increase your home's value.
- Upgrading systems: Upgrading your HVAC, electrical, or plumbing systems can reduce the risk of potential damage, possibly lowering your premiums.
- Adding safety features: Installing a security system, smoke detectors, or a sprinkler system could also potentially lower your insurance costs.
THE BENEFITS OF INFORMING YOUR INSURANCE COMPANY ABOUT HOME IMPROVEMENTS
Home improvements can make a big difference in your quality of life and make your home a more comfortable place to live. However, it’s important to remember that updating your insurance policy after making these improvements is just as important.
After all, your home insurance policy is designed to protect you from unexpected damages or losses, and any changes should be reported to your insurer as soon as possible.
1. Ensure Adequate Coverage
One of the most critical reasons to inform your insurance company about home improvements is to ensure adequate coverage. If your home’s value increases due to renovations, your policy must reflect this to ensure you’re fully covered in damage or loss.
You could be underinsured without informing your insurance provider, which means you’re not adequately covered for repairs or rebuilding costs. So, it’s essential to let your insurer know so they can adjust your policy limits to ensure you are fully covered.
2. Avoid Disputes Over Claims
In the event of a claim, your insurer could dispute it if they weren’t notified about significant changes that increased your home’s value. For example, if you added a swimming pool or finished your basement and didn’t inform your insurer, it could affect your coverage.
To avoid disputes over claims, it’s best to keep your insurer informed of any significant changes or improvements you make to your home.
3. Possible Discounts
While premiums usually increase after a renovation, some improvements, especially those that improve safety or reduce risk, could potentially lower your insurance premiums.
For instance, installing a new security system or a fire alarm might decrease the likelihood of damage to your home, which your insurer may view as a responsible investment. In that case, they might offer you a discount on your policy, so it’s best to inquire about discounts with your insurer after your home renovation.
CONSEQUENCES OF NOT INFORMING YOUR INSURANCE COMPANY OF HOME UPDATES
Failing to inform your insurer about significant home improvements can have serious consequences:
- Underinsurance risk: If your home's value has increased significantly due to improvements, you may be underinsured, meaning you won't receive enough compensation to cover repairs or rebuilding in the event of damage.
- Denial of claims: If you make a claim, your insurer might deny it if they find out you've made significant improvements without informing them.
- Policy cancellation: In extreme cases, your insurer might consider non-disclosure of material facts as grounds for canceling your policy.
3. STEPS TO TAKE AFTER MAKING HOME IMPROVEMENTS
After completing any significant home improvements, follow these steps:
1. Contact your insurance agent: Tell them about your improvements and discuss whether your policy needs updating.
2. Update your home inventory: If you've added valuable items as part of your improvements, add these to your home inventory.
3. Review and adjust your policy coverages: If necessary, increase the dwelling coverage limit on your policy to match your home's new value.
Keeping your home insurance company informed of any significant home improvements is essential to ensure adequate coverage and avoid potential disputes. Remember, insurance protects you, your home, and your peace of mind. It's always better to be safe than sorry.
If you made significant improvements to your home, don't hesitate to contact your insurance company. Share this information with others who might find it useful and help them protect their investment, too.
And if you need help finding the best homeowners insurance coverage for the best price, speak to a SimplyIOA agent at 833.872.4467 or get a homeowners insurance quote online now.
