Thinking of remodeling? Put a call to your homeowners insurance agent on your project to-do list. Here's why.
Update Your Homeowners Insurance Policy
According to a national survey conducted by Trusted Choice®, a group of insurance agencies and financial firms, nearly 40% of homeowners who said they had significantly remodeled their homes, such as adding a deck, room, or porch, said they had not updated their homeowners insurance policies to reflect these changes.
If you fail to update your homeowners insurance policy and the worse case scenario becomes a reality, your policy might not provide insurance coverage for such improvements. However, if you notify your insurance company before the remodeling begins, you may also be covered for any building materials you have in your house during the renovation.
Why Must I Notify My Homeowners Insurance Provider?
The reason you should notify your insurance company is that remodeling quickly adds to a home's value, but many homeowners fail to increase their insurance coverage to match. This means it is not until a disaster strikes that many homeowners realize that they haven't reevaluated their coverage to include any work done on the house.
After already undergoing the tragedy of losing your home, you don't want to discover that your homeowners insurance policy only covers what your house used to be rather than what you have made it into. Imagine that you renovated a small one bedroom fixer-upper into a modern three bedroom home with a new yard or deck - the difference in replacement value would be considerable!
Many homeowners only insure their homes based on their lender's requirements, purchasing only enough insurance to cover their mortgage balance. This leads experts to estimate that nearly two thirds of all U.S. homes are underinsured, and many significantly so.
Upgrades Could Lead to Homeowners Insurance Savings
If you have installed home safety upgrades to your home since you purchased your homeowners insurance policy, you may qualify for discounts if you notify your insurance provider. This same advice goes for upgrades to your home's heating, plumbing, or electrical systems.
If you do not have a homeowners insurance policy that automatically raises your coverage on an annual basis due to increasing home values in your area, make sure you periodically adjust your level of coverage to match your home's value. Ultimately, it’s up to you to make sure you have enough coverage.
Look for Multi-Line Insurance Policies
Think about insuring your home with the same company that insures your vehicle(s), as many companies offer multi-policy discounts for insuring both. Make sure any contractors you hire to work on your house are properly licensed and insured. Ask to see copies of both their licenses and insurance policies.
You should shop around for homeowners insurance quotes at least once a year. Using InsWeb.com's online homeowners insurance quote form, you can compare multiple quotes within minutes.