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Renovate versus Rebuild: What does this mean for your home insurance

02 Nov 2021

People across the world are spending more time at home than ever before. As a result, homeowners are considering taking action to completely overhaul where they live. This change can involve significant renovation or possibly entail rebuilding a home from scratch. Whatever decision the homeowner takes, they should be aware that their home insurance will likely be affected.

In the event of renovation, before anyone picks up the tools it is important that your insurance company is made aware that the renovation is going to take place. By doing this, you and your insurer can determine how your policy might respond in the event of a claim.

Certain renovations could likely raise your rates while others my provide discounts. If you add new features such as installing smoke alarms, gas detectors, shatter proof windows or security systems, these can help to lower your homeowner rate. Conversely, additions like swimming pools carry risk and will likely raise the homeowner’s premium.

On the other hand, if you add a new room to your existing house, you are seen to be adding more ‘value’ to where you live. This means that your homeowners’ insurance will increase in accordance with the new square footage of your addition. The same rule applies for a new build which is larger than your existing home.

One thing you also need to keep in mind is that the home contractor or builder you hire must have the right insurance. A contractor should have liability, property, and workers compensation insurance. If they do not, you should choose someone else.

Changing your house should be an exciting experience. But it is always a good idea to protect any new assets you may have added during and/or after the project by ensuring you have proper homeowners’ coverage.