What Types of Insurance Should You Consider for Home Improvements?

If you're planning to hire a home renovation contractor, it's important to make sure they have the right type of insurance. Generally, contractors must have liability, property and workers' compensation insurance. Ask to see their insurance certificate before you hire them. If they don't have adequate coverage, you may want to look for another contractor.

Before you start any renovations or improvements, wait until your policy is in effect. Building a home office may not directly affect the replacement value of your home, but if you're working from home, it may be worth upgrading your insurance. In any case, homeowners should consider how their home improvements will affect their home insurance policy. Replacing the roof is one of the main improvements that can reduce insurance premiums, since a new roof reduces the chance of filing a claim for damage caused by hail or leaks.

If you're making changes that make your home safer, such as upgrading electrical or plumbing systems, you may be eligible for lower rates after your insurance provider evaluates your insurance needs for your home renovation. Home upgrades cannot be paid for with home coverage, since homeowners insurance helps return the property to its pre-loss state after a covered loss. Whenever you start renovating, remodeling, or doing home improvement projects, talk to your insurance agent about it. Most standard home insurance policies don't cover home abandonment or flood damage.

Some home renovations will increase your home insurance rates, while others may qualify you for discounts.

Home improvements that increase the value

of your property can also affect the amount of insurance you need and its cost. Your insurer may offer vacant or unoccupied home insurance as a standalone policy or as an add-on to your existing home insurance policy. For example, if you have cables with knobs and tubes (which are used in most homes built before 1950), you could see a dramatic reduction in your premium and you might even find that more insurers are willing to insure your home.

This could be a good time to review your coverage and compare home insurance quotes. If you plan to make significant changes to the land around your home, talk to your insurer about what might be covered. Some companies may include a home insurance exclusion for the commercial use of personal property in your home, so be sure to talk to your agent if you have work-use items in your house and make sure you have the right level of coverage.