What Home Insurance Covers
Your home insurance will typically cover you if the remodel causes property damage, but there are a few exceptions. Here’s what you need to know about home insurance coverage and home renovations.
Before you start a project, review your coverage amounts to make sure you’re properly covered. Your insurance company needs to know about any projects that will add significant value to your home, whether you’re building a whole addition, adding a bathroom, or simply redoing the kitchen. The dwelling coverage amount—the money insurers will pay out for damage to your house—should match how much it will cost to actually replace your home.
If you hire a home improvement contractor, whose insurer will pay for damage usually depends on the type of damage, how it was caused, and your homeowners insurance policy. Your contractor needs to carry certain types of business insurance products, like workers’ compensation coverage and liability insurance. Your home insurance may help pay for repairs, or the contractor’s insurance may cover the damage.
One important thing to know about home insurance and general contractors is that home insurance policies don’t cover poor workmanship or defective building materials. If your contractor installs your shingles improperly, it’s on you to have them repaired or replaced. However, they sometimes will cover damage resulting from poor quality work, as long as that type of damage is covered by your policy. For example, home insurance policies typically cover damage from fire. Shoddy work by an electrician could cause a fire, and your policy will probably cover the fire damage, but not the cost of fixing or reinstalling the bad wiring.
Damage you cause to your neighbor’s home or property during your renovation probably won’t be covered by your home insurance. It may be covered by the contractor’s insurance if the damage was the contractor’s fault.