7+ years in business and financial services content
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Home renovation projects can be full of surprises, and some can be very unwelcome. But home renovation insurance can protect your investment. Think of it as a hard hat for your house. Understanding what the policy covers is crucial, especially when you’re knee-deep in sawdust.
Here, you’ll find out what you need to know to keep your renovation dreams from becoming nightmares.
Quick Facts
You should always let your insurance company know about any renovations before the project begins.
Some improvements, like roof or system upgrades, may qualify for insurance discounts.
Watch for common insurance exclusions like pre-existing damage, undisclosed renovations, and unlicensed contract work.
Does home insurance cover home renovations?
The short answer is no, your home insurance simply won’t be enough to cover the additional risks during construction projects.[1] Standard homeowners insurance provides some basic protections, like if someone steals your personal belongings or hurts themselves on your property during the renovation. But it doesn’t cover many common scenarios specific to renovations.
For example, if your contractor accidentally damages a neighbor’s property or someone steals construction materials from the job site, your standard policy likely won’t cover those incidents. Plus, if you’re not living in the home during the construction project, your policy may not provide coverage due to a vacancy clause that kicks in when the house is unoccupied.[2]
Home renovation insurance — sometimes called a builder’s risk policy or a course of construction policy — can pick up the slack. It can be stand-alone coverage but may also be available as an endorsement to your existing home insurance. Home renovation protection can fill in any gaps and make sure you’re not on the hook for unexpected issues that arise during your project.
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Should I inform my insurer about minor renovations?
Even if you’re just giving your kitchen a little facelift, it’s always a good idea to let your insurance company know. Notifying your insurer might not be mandatory, but even small changes can affect your coverage. A minor update could raise your home value, and you’ll want to increase your coverage to protect your investment.
Plus, something could go wrong during the renovation. If you haven’t told your insurer, your policy limits might still be enough to repair or replace items to their original condition but not to improve them.[3]
Types of coverage in home renovation insurance
Different coverages are available to protect you during a home renovation. Here are some of the most common options you’ll find in home renovation insurance policies:
Liability
Liability insurance covers injuries to people on your property during the renovation. For example, if a neighbor trips over construction materials while trying to get a peek at the progress, this coverage can help pay medical bills.
Building materials
This covers the cost of materials stored on your property. If your construction materials experience damage before installation, this coverage limits your out-of-pocket expenses to replace them.
Damage repair
Damage repair insurance covers accidental damage to your property, or nearby properties, caused by the renovation work. For instance, if the contractor accidentally breaks a neighbor’s window or damages their fence, damage repair coverage helps pay for the repair costs.
Theft or vandalism
This covers losses from theft or vandalism of construction materials, tools, and equipment. Renovation sites can be targets for thieves and vandals, and this coverage helps keep your project on track without unexpected financial setbacks.[4]
When to update your home insurance policy for renovations
Deciding if it’s time to update your home insurance policy could depend on the scale of your project and how much it changes your home’s value.
For example, you’ll want to let your insurer know if you’re doing significant renovations, like adding square footage with an addition or doing major structural work. Smaller projects that boost your home’s value, like a kitchen remodel, could mean you need more homeowners insurance coverage.
Important Information
It’s important to note that renovations can change your insurance rate as well, and higher coverage limits will generally drive up your insurance bill. That said, some fixing up, like updating your electrical or plumbing systems, could potentially lower your costs if these improvements reduce the risk of damage or claims.[5]
Steps to take before starting renovations
Here’s a handy checklist of essential steps to take before diving into your home overhaul:
Notify your insurer. Give your insurance agent a heads-up about your plans. Ask if your policy premiums will change, what you’ll need to do to maintain coverage, and how your protection might change during or after the project.
Review and update your policy. Take a close look at your coverage and confirm whether it’s enough to protect your home during, and after, the overhaul. Consider increasing your liability protection and adding home renovation insurance for more peace of mind.
Get the necessary permits and approvals. Make sure you have all the required permits and approvals from your local government before starting any work. This can help you avoid costly fines and delays.
How to choose the right home renovation insurance
Choosing the right home renovation insurance requires carefully matching your specific project to the protection you need. Here are some tips to help you navigate the best coverage:
Assess the scope of your renovation. Carefully review your rebuilding plans and consider all the potential risks. Are you doing a major renovation or just updating a few fixtures? The more extensive the project, the more coverage you’ll likely need.
Compare policies and insurers. Don’t just go with the first policy you find. Shop around and compare options from different insurance companies. Look for policies that offer the right balance of coverage and affordability for your renovation project.
Understand exclusions and limitations. Read the fine print and ensure you know what your policy covers and what it doesn’t. Some policies might have exclusions for certain types of damage or limits on coverage amounts.
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Home renovation insurance discounts
Some home renovations can actually save you money on your insurance premiums if they make your home safer or more resistant to damage. Qualifying upgrades may include installing a new impact-resistant roof, storm shutters, or a home security system. Updating your heating, plumbing, or electrical systems to reduce fire and leak risks could also lead to savings.
Common exclusions in home renovation insurance
Common exclusions in home renovation insurance can turn a remodeling problem into a major headache. Here’s what to watch for:
Pre-existing damage: Insurance companies don’t cover damages or wear and tear claims that existed before the construction began.
Non-disclosed renovations: If you don’t tell your insurer about your plans and something goes wrong, it might not cover the damages.
Unlicensed contractors: Using unlicensed contractors can void your coverage, leaving you responsible for any resulting damage or issues if something goes wrong.
What to do if damage occurs during renovation
Despite your best efforts to prevent accidents during a home renovation, sometimes things can still go wrong. A burst pipe, a collapsed wall, or another unexpected mishap can cause both physical and financial headaches.
Here’s how to handle the situation:
Document the damage
Take photos or videos to start a record of the damage. Make sure to get images from a few different angles. Write down the date, time, and any other details about how the damage happened.
Contact your insurance company
Let your insurance company know immediately. When reporting the damage, share the documentation and information you collected.
File a claim
Follow your insurer’s process for filing a claim. This usually involves filling out forms and submitting the documentation of the damage, if you haven’t already. Keep copies of all the paperwork for your records, and stay in touch with your insurer throughout the claims process.
Tips for minimizing risks during home renovations
Home renovations can be exciting but also open you up to risks. Consider these proactive steps to protect yourself:
Only work with licensed and insured contractors. Hire reputable professionals with proper licensing and insurance. This way, you’re protected in case of accidents, damage, or incomplete work.
Keep tabs on work progress. Monitor the renovation by visiting the site regularly and talking with the contractor. It can help you identify and resolve issues before they become big problems.
Secure the renovation site. Keep the work area inaccessible to children and pets, and store tools and materials safely when construction ends.
Home renovation insurance FAQs
Insurance questions can make your head spin if you’re knee-deep in your home renovation project. Here are some answers to the most common headaches.
Does home insurance cover all types of renovations?
Typically, no. Standard homeowners insurance policies don’t usually cover renovation projects. Coverage depends on the type of work and amount of work being done. Always check with your insurance company before starting a new renovation project.
Can renovations increase my home insurance premium?
Yes. Renovations that increase your home’s value or change its structure can lead to a higher insurance bill. That’s because these changes can make repairs or rebuilding your home more expensive.
What if I don’t update my policy before starting renovations?
Your insurer can deny your claim if you don’t let them know about your renovation project and something goes wrong. Updating your policy can ensure you have the right coverage for your project.
What home remodeling projects could lower your insurance premiums?
Reinforcing your roof or upgrading to impact-resistant materials, adding storm shutters, installing a home security system, and updating HVAC, plumbing, or electrical systems can make your home safer and potentially lower your insurance premiums.
What if my home gets flooded during renovations?
Your insurance company may cover the damage if a pipe bursts and causes flooding during renovations. It depends on the cause. Insurance doesn’t cover water damage caused by contractor mistakes, aging, or regular wear and tear.
Amy is a personal finance and technology writer. With a background in the legal field and a bachelor's degree from Ferris State University, she has a talent for transforming complex topics into content that’s easy to understand. Connect with Amy on LinkedIn.
7+ years in business and financial services content
Chris is a seasoned writer/editor with past experience across myriad industries, including insurance, SAS, finance, Medicare, logistics, marketing/advertising, and many more.
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