If you are thinking about upgrading your home, check out these homeowners insurance tips for remodeling.
You’ve hired a reputable builder, collected paint swatches and selected the siding. Now you’re finally ready to start your remodeling project.
What Protection does your Homeowners Insurance offer?
Remodeling projects increase the value of your home and your personal risk. Here’s what you need to know to make sure your project goes smoothly and that you have the coverage you need.
The best way to minimize your renovation risk is to hire a reputable general contractor for the job. As part of the biding process, ask the general contractor to provide a Certificate of Insurance and/or copies of the policies. Specifically, check for coverage for the following:
- Workers’ Compensation: Verify that he or she has workers’ compensation coverage in the event that an employee or subcontractor gets hurt on the job.
- General Liability: Ask if the contractor has liability insurance, which covers losses due to negligence and errors or omission, which results in property damage. Also ask that you are added as an “additional insured.”
- Builders Risk: This policy is designed to cover damage to your home and materials, including those not installed yet. We can help you verify whether you should require this from your contractor, based on your renovation project.
If you decide to do it alone and manage a renovation yourself, you assume all the risks. A review of your homeowners insurance is prudent because you are assuming more risks than contemplated by most homeowners insurance.
Hiring subcontractors who can provide you with a “Certificate of Insurance” or copies of their policies is mandatory. These should show their general liability and workers’ compensation coverage. If a contractor doesn’t have their own workers compensation coverage you could be responsible for their injuries while working on your home. If a friend or relative helps out as a favor and gets injured there will be little to no coverage provided by your homeowners insurance policy. It is also smart to purchase an umbrella to provide extra protection in case you are sued.
Insuring the Real Value of Your Home
Experts estimate that 1 out of 4 remodeling projects adds at least 25 percent to the value of a home, yet often most homeowners forget to increase their coverage to protect their investment. Most homeowners insurance policies require 100 percent of the home’s replacement cost, so it’s important to raise your home’s policy limit before your project begins.