3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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Your standard home insurance policy can sometimes cover home improvements, though it depends on what coverage you have and whether you notify your insurance company in a timely manner.
In some cases, you may want to increase your existing coverage limits for dwelling, other structures, or personal property coverage after consulting with your insurance company. Or, if you plan to temporarily move out of your house for a few months, you may want to consider purchasing a separate vacant home insurance policy during the renovation process.
Here’s what you need to know about homeowners insurance and coverage for your home improvements.
Will homeowners insurance pay for renovations?
Whether your homeowners insurance policy pays for renovations made to your home depends on why you’re renovating your house.
Homeowners insurance typically only covers damages from unexpected events like theft, vandalism, or severe weather. For example, if a storm damages your home to the extent it requires rebuilding, homeowners insurance will cover the cost.
But if you planned for the home renovation to occur, it’s probably ineligible for coverage. So, if you want to upgrade your kitchen or bathroom because it could use a new look or an upgrade, your insurer will likely refuse to cover the renovations.
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Does coverage apply during and after renovations?
Whether your insurer will pay for your home renovation depends on your policy’s terms. Before you start your home improvement project, you should ask your insurance company which coverages you need.[1] Your insurer may ask you to increase your coverage limits on your dwelling, other structures, or personal property coverage.
For example, if you build a new home addition, you must adjust your dwelling coverage. If you plan to purchase furniture for your added living space, you’ll need to adjust your personal property coverage. If you’re doing a minor renovation with the help of friends or family, you may want to increase your no-fault medical protection to cover any potential injuries.
Your home insurance company will likely cover completed renovations. But you must update your coverage to reflect the new value of your home, other structures, and personal property. Increasing your coverage will increase your insurance premiums.
Important Information
If you fail to update your coverage limits, you may face issues when submitting a claim for coverage. Additionally, homeowners insurance doesn’t cover poor workmanship or faulty work.[2] If your insurance agent doesn’t recommend increasing your coverage limits, they’ll probably point you toward builder’s risk insurance.
What home insurance covers
Homeowners insurance covers damages and repairs to your home if a listed peril caused it. Perils are risk factors that result in losses or damages to your property.[3] Some examples of covered perils include fire, smoke, theft, and vandalism.
A standard homeowners insurance policy offers the following coverages:
Dwelling coverage
Dwelling coverage protects your home’s structure, like its foundation, walls, and roof, against a variety of perils, such as fire, lightning, and hail, as long as your policy doesn’t exclude the peril.
Personal property coverage protects your personal belongings — like furniture, appliances, clothing, and electronics — from the 16 perils in your policy.
Personal liability coverage
Personal liability coverage pays for legal expenses related to injuries or property damages caused by you or a household member.
Medical payments coveragepays for medical costs if someone incurs an injury on your property.
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What homeowners insurance doesn’t cover
Homeowners insurance companies enforce policy exclusion because some perils are too costly to insure. Here are some of the common exclusions, though your policy may have more.
Floods: Homeowners insurance doesn’t cover floods because they’re widespread, high-risk events that tend to cause expensive damages.[4] You’ll have to purchase a separate flood insurance policy to receive this coverage.
Earthquakes: Like floods, earthquakes cause expensive damages. Insurers don’t offer it as standard coverage in order to avoid significant financial losses.[5] You’ll have to purchase a separate earthquake insurance policy to receive this coverage.
Poor maintenance: Insurance companies don’t cover damages from neglect, like termite and mold growth. Instead, the homeowner is responsible for conducting regular and proper home maintenance.
High-value items: Home insurance policies have low coverage limits for valuable items, like jewelry, furs, or collectibles.[6] But you can raise your personal property coverage limit or purchase a floater to fully insure your high-value items.
Other damages: A standard homeowners insurance policy will typically exclude some perils, like war or nuclear hazards.
Home improvements that can decrease insurance rates
Although home insurance doesn’t cover home renovations in all cases, home improvements may lower your insurance rates. This is how different home repairs reduce your insurance premiums and by how much, according to home services website Angi:[7]
Roof: Replacing an old roof makes it less vulnerable to water damage and can save you up to 35% on an insurance policy.
Wiring: Upgrading to copper wiring reduces the risk of electrical fires and can save you up to 20% on your insurance policy.
Plumbing: Old plumbing systems that aren’t up to current building code are susceptible to flooding and water damage. Many insurers will credit up to 20% of your insurance policy for modernizing your plumbing system.
Security systems: Installing security systems reduces the risk of theft or vandalism losses and can save you up to 20% on your insurance policy.
Sprinklers: A sprinkler system helps put out fires and earns you a discount of as much as 10% on your policy.
Deadbolt locks: Installing deadbolt locks on exterior doors provides added security, potentially leading to a 10% discount.
Wind retrofitting: Wind-proofing your home can help it withstand high winds and debris impact. Fortifying your house against wind can get you a discount of up to 15%.
Home improvements that can increase insurance rates
Some remodeling projects necessitate more coverage. As a result, your insurance premium may increase.
Swimming pool:Attractive nuisances like swimming pools or trampolines increase the risk of accidents on your property. As a result, you may require more liability coverage, raising your insurance costs.
Extension/addition: Raising your home’s square footage requires increasing your dwelling coverage, which means higher insurance premiums.
Home office: A home office often requires increased personal property coverage to protect your business equipment. Similarly, increased liability insurance is a must depending on the type of business you operate.[8]
Bath/kitchen remodel: If you upgrade your bath or kitchen with high-value material such as granite or marble, your home’s replacement cost coverage increases.
How to make sure your home insurance covers renovations
Home renovation sites have an increased risk to various perils, and you’ll want to protect your home and the improvements you’ve made. Here are some ways to guarantee your homeowners policy covers your home renovation projects.[1]
Tell your insurer
Notifying your home insurance company before you begin renovations is a good idea. Your insurance agent will let you know if you should update your existing insurance policy or if you should purchase separate coverage for your home construction. It may also be a good time to inquire about any discounts you qualify for after home renovation.
Adjust your coverage limits
Here’s a closer look at the coverages to adjust before your home renovation project:
Dwelling coverage: Determine the replacement cost of your improved home and adjust your dwelling coverage amount.
Personal property coverage: Increase your personal property limits if you’ve bought new things for your remodeled home, like art or furniture. You may need additional coverage through a personal property endorsement or floater for expensive items.
Personal liability coverage: You’ll also want more liability insurance if you’ve installed attractive nuisances, like a swimming pool or a hot tub.
Consider additional coverage options
In some scenarios, you may decide you want additional coverage beyond simply adjusting the limits on your existing coverage.
Builder’s risk coverage: Construction sites are at risk for theft and vandalism. A builder’s risk policy protects your home structure and building equipment and material on- or off-site. Property owners, general contractors, and subcontractors typically purchase builder’s risk insurance.
Dwelling under construction endorsement: If you need to complete a short-term construction project, a dwelling under construction endorsement provides additional protection to your home.
Vacant or unoccupied home coverage: If you’re having extensive repairs on your home that require you to live elsewhere for 30–60 days or more, a vacant home insurance policy can protect your home while you’re away.
Document your home improvements
Your insurance company may ask for documents related to your home renovations. Take pictures and keep copies of contracts and receipts you’ve accumulated throughout the renovation process.
Home insurance and renovations FAQs
Below, you’ll find answers to common home insurance and renovation questions.
Does homeowners insurance cover damage during home improvements?
It’s possible. It depends on your insurance company. Your insurer will likely ask you to increase your coverage or purchase a home construction endorsement like builder’s risk insurance.
Which home repairs does most insurance cover?
As long as you’ve notified your insurer of home repairs and adjusted coverage accordingly, your home insurance policy should kick in for covered damages to your home’s structure, detached structures like a garage or shed, personal belongings, legal expenses related to injuries on your property, loss of use coverage, and medical costs related to injury on your property.
What doesn’t a homeowners insurance policy cover?
Homeowners insurance typically doesn’t cover damage from floods, earthquakes, poor maintenance, war, or nuclear hazards. Your home insurance policy may also not cover your valuable items — such as expensive collectibles or jewelry — unless you have an insurance endorsement for high-value items.
How does renovation insurance work?
To protect your home during renovations, it’s important to contact your insurance company to increase coverage limits and add any extra coverage you need for the new value of your home. For example, you may need a vacant home policy if you’re temporarily living somewhere else during a major renovation.
Alani Asis is a personal finance freelance writer with nearly three years of experience in content creation. She has landed bylines with leading publications and brands like Insider, Fortune, LendingTree, and more. Alani aims to make personal finance approachable through fun, relatable, and digestible content.
Edited byKatie PowersAuto and Life Insurance Editor
Katie PowersAuto and Life Insurance Editor
Licensed auto and home insurance agent
3+ years experience in insurance and personal finance editing
Katie uses her knowledge and expertise as a licensed property and casualty agent in Massachusetts to help readers understand the complexities of insurance shopping.
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