How Updating Your Home Affects Home Insurance Rates

Feb 16 2018
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Hey guys! Today we’re talking about home insurance. I went through a local agent in town and he came out and had a look at the house, I was just about done with the renovation at that point but he had a couple of things I HAD to complete. One was permanent steps on the front entrance – here’s what’s funny about that though, my “front” entrance is actually my back door that leads into my dog kennel complete with doggie door lol it was considered my “front” door because it faces the road – but it is things like that that agents have to follow and you have to do to get a home insurance plan. After renovations you definitely want to call your agent and have them come out and reassess what you did! (The following is a sponsored post, for more information about my compensation please read my disclosure policy)

Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

Updating or remodeling your home is an exciting time. All the hard work saving up money, contemplating ideas, and talking with friends and family about it has added up and you are ready to get going on the project. Your dream is about to come true. Yet, there are minor details that you need to become aware of relating to your home insurance implications. Remodeling your home can increase or decrease your home insurance rates. Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

Special Architectural Features
Adding new features can significantly impact your home insurance. For example, a new deck, added lighting, new windows, and bath renovations all have effects. These updates should be reflected in your home insurance policy as it covers your home’s current value and square footage. So, it’s important to update your policy to include the new additions. If not, then your home may be insured for less than its market value.

Building Materials
The types of materials that you use for your project matters. The more expensive materials you use, the more expensive it is going to be replace reflected in your homeowners insurance coverage. Make sure you let your insurer know what types of materials that you are using, and keep the receipts of your purchases. If top-notch materials are used, be sure you are able to prove it if something disastrous does happen to your home such as a tree falling on your house.

Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

New Household Items
The most common additions to people’s homes are household items. This includes, but not limited to, appliances, countertops, flooring or fixtures, which all add value to your home. While it may be nice to have the most valuable fixtures, appliances, and possessions, it will increase the rate you have to pay on your homeowner’s insurance rate. You have two options when insuring items that are in your home. The first is actual cash value, and the other is replacement cost.

Actual cash value pays out the cost of your claim, minus depreciation. After a few years, a $600 stove loses value about a third less to $400. That is the amount your insurance company will pay out to replace the household item. The other is replacement cost, which replaces the full cost of $600. Your monthly premium cost will be slightly higher, but you will have full coverage. It is a balancing act and matters on the opportunity cost of going for actual cash value or replacement.

If you are doing the project yourself, it is recommended that you choose actual cash value because you will save money on monthly insurance premiums. With larger scale projects you may want it to be insured under replacement cost.

Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

Increasing Liability Coverage
Certain projects need to be reflected in your home insurance policy that adds liability risk. This includes decks, porches, pools, hot tubs all of which can increase risks of injury in your home. If you’re doing a project that may increase risk, you might want to check your coverage implications.

Basic liability coverage in most homeowner’s policies is $100,000. This protects you from claims by others for bodily injury or property damage for which you are at fault. With high risk additions it is a good idea to increase your liability coverage from $100,000 up to $500,000. The added coverage is typically only $25 extra per year.

In all, your updated renovations should be reflected in your homeowners insurance. You don’t want to update your home and have a disaster/injury occur in your home and be denied a claim because you failed to do so. It is best to be proactive and double check before it is too late.

Find out which improvements will cost you more, and which will save you money. Home improvement projects usually increase the value of your home. With this increase of value, it can have an effect on your homeowner’s insurance policy.

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5 Comments on "How Updating Your Home Affects Home Insurance Rates"

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nancy
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Great ideas!!!

Leanna
Guest

I am very aware of how the projects we choose to do affect our home value, like last summer we put in granite I know our home value increased. This post helpful because we had no considered updating our insurance policies. Thanks for the heads up.

Ron Pickle
Guest

Nice tips Nancy! Indeed lots of home owners do not care to inform their insurance companies about the expensive updates carried on their home and thus deprive themselves on receiving financial supports during an expensive damage.

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