Home improvement projects have bloomed in recent years. A recent survey shows that spending on home improvement projects increased by 28%, surpassing $432 billion by the end of 2021. Among the many factors homeowners should consider before planning a renovation project is its effect on their home insurance policy. Major home improvement projects can increase the value of your home and the cost of house insurance. The following home renovation projects can increase your home insurance rates.
1. Adding a home office
Home offices are increasingly becoming popular, especially following the shift to remote work models during and after the pandemic. Constructing a home office or converting one room into a workspace certainly increases your home value. Home office addition also increases your insurance rates and sometimes requires that homeowners purchase more coverage for the new equipment.
If you constructed a new workspace, consider purchasing a different policy to protect employee injuries and crime. Most home insurance policies provide coverage of $2,500 for home-based equipment. However, you can increase the coverage amount to fit your needs.
2. Upgrading your kitchen or bathroom
The 2022 cost vs. value report shows that kitchen and bathroom remodels can increase property value by 50%. Making quality installations to your kitchen and bathroom, such as switching laminate countertops for granite options and custom cabinets, significantly increase your home insurance coverage rates. If your home insurance policy isn’t enough to rebuild the new kitchen or bathroom with new upgrades, you should increase your dwelling coverage to match the upgrades. If you don’t make these upgrades, you may end up paying for the damages out of pocket.
3. Swimming pool addition
Constructing a swimming pool, especially in some locations, significantly increases property value. However, insurers consider swimming pools an attractive nuisance, increasing liability risks and insurance premiums. Most standard homeowner insurance policies don’t provide liability coverage.
Your insurance agent may suggest that you purchase separate liability coverage. Similarly, you should consider taking an umbrella insurance policy, which provides greater financial protection if your claims exceed your liability coverage amount. Installing safety features, such as a fence around the pool or safety cover, can lower your premiums.
4. Expanding your space
Home renovations to accommodate increasing family size include modifying the floor plan or adding livable square footage by converting the basement or attic. Expanding your home increases property value and corresponding dwelling coverage. Your post-renovation insurance premiums will certainly increase, even if the added space isn’t inside your home.
Constructing an outdoor deck increases your home’s value, requiring insurance reassessment. You should also consider different coverage for newly constructed areas. For instance, a newly constructed basement with a new floor, insulation, and drywall needs a separate sewer backup policy. Expanding usable space, inside or outside, will alter your insurance premiums.
Endnote
Home improvement projects affect your home insurance in many ways. Major renovations that increase property value similarly increase premium rates. On the other hand, remodeling projects that make your home safe, such as roof replacement and updating the electrical or plumbing systems, can lower insurance rates. Always consult your home insurer before and after renovation.
