Why a renovation changes your coverage
During a remodel, a home faces new risks: open walls, stored materials, extra people on site and sometimes no one living there. Some policies limit coverage when a home is under major construction or left empty. Your insurer needs to know what's happening so you aren't caught by a gap.
Before work starts
- Call your insurer or agent and describe the project and timeline
- Ask whether your policy covers the home during construction
- Ask whether you'll be living in the home while the work happens
- Get proof of your contractor's liability and workers' compensation insurance
- Keep copies of the contract, permits and plans
Your contractor's insurance
Your contractor's general liability insurance can help if their work damages your home or a neighbor's. Workers' compensation can help if one of their workers is hurt on your property. Without it, an injury claim could fall to you. Ask for certificates of insurance and check that they're current.
Builder's risk insurance
For large projects, such as an addition or a gut renovation, a builder's risk policy may be needed. It typically covers the structure being built and materials on site against risks like fire, theft and some weather. Sometimes the contractor buys it and sometimes the homeowner does, so decide who is responsible in the contract.
After the work is done
A new kitchen, finished basement or added room raises what it would cost to rebuild your home. If your dwelling coverage stays the same, you could be underinsured. Update your agent with the final scope and cost so your coverage keeps up. Coverage depends on your policy, so review it or talk with your agent.
If you're financing the project
If you're borrowing for the work, your lender will want the home properly insured throughout. Keep your insurer and your lender in the loop on major changes.
Some lenders that fund renovations ask to be named on the policy or want proof of coverage before releasing money for the work. Ask what they need at the start so the project isn't held up waiting for paperwork, and tell your agent when the project is finished so your policy reflects the new value.
