Home Renovation Insurance: Do You Need It for Your Remodel?
Standard home insurance may not cover all renovation risks. Consider adding home renovation insurance to fill coverage gaps.
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If you plan to make major renovations to your home, a home renovation policy should be on your radar. Also known as builder’s risk insurance, it can help protect you in ways that your standard home insurance policy won’t cover, especially if your house is vacant while work is going on.
Here’s what you should know about home renovation insurance, so you can determine whether you need specialized coverage endorsements or stand-alone policies before you tackle your next project.
Quick Facts
Standard home insurance policies don’t usually cover major renovations or vacant homes.[1]
If your project will force you out of your home for 30–60 days, you’ll need vacant home insurance.
The cost of home renovation insurance depends on your location, project scope, materials used, and other factors, but it’s typically between 1% and 5% of the project’s total cost.[2]
Does home insurance cover renovations?
A homeowners insurance policy offers limited protection for renovations and typically covers minor cosmetic updates, including painting or replacing carpet. Most policies exclude major structural work or renovations that require your home to be vacant.
Depending on the scope and size of your project, you may need additional coverage to protect your home’s structure and liability.
For example, if someone steals construction materials from the job site, you’re unhappy with a contractor’s job, or you have to move out of your home during the project, home renovation insurance can step in and address the insurance coverage gaps of your standard home insurance policy.
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Types of home renovation insurance
You have three main options for insuring a renovation, including:
Endorsement: Home renovation coverage may be an add-on to your standard home insurance policy. It can help you protect against stolen equipment or damaged materials.
Builder’s risk policy: Builder’s risk insurance can cover your home while it’s under construction. It’s designed to protect against property damage, lawsuits, pollution and hazardous waste removal, equipment breakdown, and arson. If you’re unable to add on a home renovation endorsement to your standard home insurance policy, a builder’s risk policy might be worthwhile.
Vacant home insurance: Standard home insurance doesn’t usually cover vacant homes. If you have to live somewhere for more than 30–60 days during your home improvement project, you might need a vacant home policy.
Remember that the ideal home renovation insurance policy for you depends on your project’s scope, duration, and whether your home will be occupied or vacant. That’s why it’s important to review your options carefully before making a final decision.
What home renovation insurance covers
While every home renovation policy has its own set of coverages, your policy will likely include some or all of these protections.
Property damage
Property damage coverage can reimburse you for fixing accidental damage or replacing stolen materials during your renovation.
Liability coverage
Liability insurance covers medical expenses and legal fees if someone gets injured on your property during a project.
Legal expenses
If disagreements about zoning, permits, or property lines occur during your project, home renovation coverage can protect you against unexpected costs.
Vacant homes
Home renovation insurance may protect your home when you’re living elsewhere during your project.[3]
What home renovation insurance won’t cover
Just like standard home insurance, home renovation coverage comes with exclusions, such as:
Pre-existing damage: An insurance company won’t cover wear and tear or damage that was already in your home before the project began.
Non-disclosed projects: If you move forward with a renovation without letting your insurer know, and an issue arises, you may not be covered.
Unlicensed contractors: In most cases, you’ll need to work with licensed contractors for your coverage to apply.
Natural disasters or unforeseen events: A home renovation policy won’t cover flooding, earthquakes, war, or related incidents that are outside of the contractor’s control.
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Cost of home renovation insurance
Home renovation insurance is usually affordable, especially when you add it as an endorsement to your standard home insurance policy. The cost of coverage is generally 1%–5% of your total renovation cost.
Your rate will also depend on the scope and duration of your project, where your property is located, the materials used, and whether your home will be vacant during the renovation.
Fortunately, you won’t need to invest in home renovation insurance forever. Once your project is over, you can cancel it.
Do you need home renovation insurance?
Home renovation insurance is usually worthwhile if your project involves structural changes, requires you to move out temporarily, or the materials and labor exceed $500,000.
Here are several scenarios in which coverage likely makes sense:
You’ll be adding a new bedroom to your home.
You plan to completely gut and remodel your kitchen.
Your project will take 60 days or longer.
Your renovation requires a lot of expensive tools and equipment.
Before you proceed with your renovation, be sure to contact your mortgage company, which may require proof of builder’s risk coverage for construction loans.
Home renovation insurance FAQs
Here are some common questions about home renovation policies and the answers to help you make an informed decision going forward.
What’s the 30% rule for home renovations?
The 30% rule for home renovation states that you should cap your renovations at no more than 30% of the value of your home. This can help you prevent over-improving your home and prioritize improvements with strong ROI.
Does homeowners insurance cover home renovations?
No. Homeowners insurance won’t pay for remodeling projects, but it may cover medical bills from injuries or property damage from a covered peril, up to your policy limits. Read your policy terms carefully so you know what’s covered and what’s not.
Does home insurance cover roof repairs?
A home insurance policy might reimburse you for roof repairs if your roof was damaged by a covered peril, such as a fire, windstorm, or hail damage.
How much does home renovation insurance cost?
Home renovation coverage generally costs between 1% and 5% of your total renovation cost. But your exact premium will depend on factors like the scope and duration of your project, the building materials used, your property location, and whether your home will be vacant.
Will homeowners insurance cover a construction defect?
In most cases, home insurance won’t cover instances when a contractor does something incorrectly or when you’re displeased with your project. Depending on the situation, you might need to file a lawsuit or complaint with their licensing agency.
How does a dwelling under construction endorsement work?
A dwelling under construction endorsement is an add-on to your home insurance policy that may cover a shorter renovation project lasting two months or less.
Who needs a builder’s risk policy?
Builder’s risk insurance is intended for anyone who has financial interest in a construction project, including the homeowner, general contractor, subcontractor, lender, engineer, or architect.
When do you need vacant home insurance?
If you won’t be in your home for at least 30–60 days during your home renovation, you’ll need to invest in vacant home insurance. Standard home insurance typically excludes vacant homes.
Sources
- Insurance Information Institute. "A Vacant Home Still Needs Insurance. Don't Be Caught Without Coverage."
- Block Rennovation. "What is Renovation Insurance and How Does It Work?."
- Builders Risk. "Home Renovation Insurance."
Methodology
Insurify data scientists analyzed rates from more than 180 home insurance companies sourced directly from Insurify’s partner companies and Quadrant Information Services. Rates span all 50 states and Washington, D.C., and quote averages represent the mean price for a given coverage level and geographic area. To ensure data reliability, only insurers meeting minimum quote thresholds were included in the analysis.
Unless otherwise specified, quoted rates reflect the average cost for homeowners with no prior claims and good credit with a home construction year of 1980. The default coverage assumptions include:
Default Coverage Assumptions
- Dwelling coverage: $300,000
- Deductible: $1,000
- Personal property limit: $25,000
- Liability limit: $300,000
Additional data points beyond these default values are sourced from Insurify’s proprietary database. Rates are updated monthly.
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Anna BaluchAuto and Home Insurance Writer
4+ years writing insurance and personal finance content
MBA from Roosevelt University
Featured in
Katie PowersLicensed P&C Agent, Senior Insurance Editor
Licensed auto and home insurance agent
4+ years experience in insurance and personal finance editing
NPN: 20564519
Featured in
John LeachLicensed P&C Agent, Chief Copy Editor
Licensed property and casualty insurance agent
10+ years editing experience
NPN: 20461358
Featured in