Have You Renovated Your Home? Call Your Insurer
Americans have been busy renovating their homes in record numbers since the COVID-19 pandemic. Home renovation spending grew 15% in the last year to a median of $15,000 (according to Houzz). It also found that higher-budget projects saw an increase to $85,000 or more in 2020, compared with $80,000 in the two years prior.
When you spend money on home renovations, you should always inform your insurer about it. Say, for instance, the new kitchen increased the cost of rebuilding your home after a claim – your current policy limits may not be enough to reimburse you if you have a total loss.
Ideally, it would be best to inform your insurer before you start renovations. Below we list the main home renovations that you should inform your carrier about:
Kitchen and bathroom upgrades – One of the most surefire ways to increase your home’s value is to remodel the kitchen or bathroom. A kitchen upgrade will cost an average of $35,000 while adding an average value increase of $20,000 to your home. Your homeowner’s policy may not have high enough limits to cover the cost of rebuilding after a disaster or fire. Please note: If you upgrade your electrical or plumbing systems during a renovation, you could qualify for an insurance discount.
Flooring – New or refinished wood flooring also adds value to your home. Installing wood flooring by replacing another floor, usually has a 91% return on investment. So a $10,000 wood flooring installation can add around $9,000 in value to your home, depending on the flooring type you choose.
Siding – The average cost of siding replacement in 2020 was $14,518, and the replacement cost is likely to be higher today due to higher material pricing.
Adding more square footage – Some people have added more space to their homes to make telecommuting more comfortable. Home expansions can add value to your home in the resale market. However, it will also increase the cost to rebuild after a total loss. Additional insurance might also be necessary if the space you added is outside: like a deck or granny unit.
Some final tips
When doing a remodel, make sure that your contractor is licensed, insured and surety bonded before signing the contract. If the contractor starts but doesn’t finish the job, their surety bond will cover financial losses the homeowner incurs. You also want to make sure your contractor has general liability insurance. This will cover them for accidental injury to someone other than a worker or themselves. You will also want to make sure they have workers’ compensation insurance. If no policy is in place and their worker is injured on the job, they can go to your homeowner’s policy for coverage. Finally, call your insurer if you’ve made upgrades or have added expensive fixtures.
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