Managing Home Insurance When Planning Major Renovations

Planning major renovations on your home can be an exciting and transformative experience. Whether it’s a kitchen remodel, expanding the living area, or adding an outdoor deck, renovations can significantly enhance the value and functionality of your property. However, as thrilling as the process may be, it comes with its own set of risks and responsibilities — especially when it comes to home insurance.

Managing your home insurance during major renovations is crucial to ensuring that you’re adequately covered before, during, and after construction. With the right understanding and preparation, homeowners can avoid gaps in coverage and unexpected out-of-pocket expenses.

In this comprehensive guide, we’ll explore the key considerations for managing home insurance when planning major renovations. We’ll discuss the types of coverage needed, how to communicate with your insurance provider, and best practices for protecting your property throughout the renovation process.

The Importance of Home Insurance During Renovations

Renovations inherently come with a certain level of risk. Construction activities — whether it’s tearing down walls, installing new plumbing, or upgrading electrical systems — can introduce hazards to both the property and the people involved. Homeowners must understand that standard home insurance policies may not provide sufficient coverage during renovation work, and they must adjust their policy to reflect these changes.

Key Considerations for Managing Home Insurance During Renovations:

Increased Risk Exposure: Major renovations often involve structural changes, electrical work, and the installation of new systems (like plumbing and HVAC). These activities introduce risks such as fire, water damage, accidents on the worksite, and even theft of materials.
Temporary Displacement: Renovations may require homeowners to temporarily move out of their homes. If your home becomes uninhabitable during the renovation, your homeowners’ insurance may cover additional living expenses, but it’s essential to confirm this with your insurer beforehand.
Changes in Property Value: Renovations can affect the value of your home, and your current insurance policy may not reflect the new, higher value once the project is completed. It’s crucial to ensure your coverage limits are adjusted to protect your newly renovated home.

Types of Coverage Needed During Renovations

Homeowners should review their current insurance policy before starting any renovation work. Renovation projects typically require additional coverage, and your existing policy may need to be updated. Below are the types of insurance coverage you may need during renovations:

1. Builder’s Risk Insurance

Builder’s Risk Insurance (also called Course of Construction Insurance) is essential for protecting the structure and materials during renovations. This insurance covers the home during construction against risks such as fire, vandalism, theft, and weather-related damage. While some homeowners’ policies may include limited coverage for construction projects, builder’s risk insurance provides more comprehensive protection.

What’s Covered:
- Damages to the structure under construction.
- Damage to construction materials and supplies.
- Risks such as fire, vandalism, and severe weather.
- Theft of materials or tools on-site.
What’s Not Covered:
- Workers’ injuries on-site (this would be covered under workers’ compensation).
- Damages to existing structures unrelated to the renovation.

2. General Liability Insurance

General Liability Insurance is typically required if you’re hiring contractors for your renovation project. This type of coverage protects against bodily injury or property damage caused by the work being done on the property.

What’s Covered:
- Injury to workers or visitors on the property.
- Accidental damage to the property or neighboring homes.
- Damage caused by faulty construction or materials used during the renovation.

3. Homeowners Insurance

While home insurance may cover some aspects of a renovation, it may not be enough on its own. Your existing homeowners’ insurance should be reviewed and updated to ensure it includes:

Dwelling Coverage: This ensures that your home and structure are protected if something goes wrong during the renovation.
Personal Property Coverage: Renovations may involve storing personal items in different areas, including temporary storage units or at off-site locations. Ensuring these are covered by your homeowners’ policy is essential.
Liability Coverage: This is important in case anyone is injured on your property due to the construction work.

4. Flood Insurance

If your renovations involve changes to your home’s foundation, basement, or plumbing system, you may need to consider flood insurance. Standard homeowners’ insurance typically doesn’t cover flood-related damage, so if you live in a flood-prone area, flood insurance may be necessary.

What’s Covered:
- Damage to your home from floods, which can be especially important if your renovations involve lower levels or near the foundation.
What’s Not Covered:
- Flooding caused by poor maintenance, like a clogged drain or broken sump pump.

Steps for Managing Your Home Insurance During Major Renovations

Proper planning and communication with your insurance provider are key to ensuring that your home is fully covered during a renovation. Follow these steps to make sure you have the right coverage in place.

1. Review Your Current Home Insurance Policy

Before starting any renovation work, it’s essential to review your current home insurance policy. Understand what is covered under your existing policy and determine whether you need to make adjustments.

Key questions to ask:
- Does my policy cover damages from construction work?
- Is my liability coverage sufficient for injuries that may occur on-site?
- What is my home’s current insured value, and does it reflect the renovation project?

2. Notify Your Insurance Provider

Your insurer needs to know about the renovations you plan to undertake. Providing them with detailed information will allow them to adjust your policy accordingly.

What to inform your insurer about:
- The type of renovation (e.g., kitchen remodel, basement finishing, structural work).
- The contractors or workers involved in the project.
- The expected duration and timeline of the renovation.
- The value of any new materials or additions to the home.

3. Consider Temporary Relocation Coverage

If your renovation will require you to temporarily move out of your home, make sure that your homeowners’ insurance includes additional living expenses (ALE). ALE helps pay for things like hotel stays or renting a temporary residence.

Questions to ask your insurer:
- Does my policy cover additional living expenses if my home becomes uninhabitable during the renovation?
- What are the limits of my ALE coverage?

4. Hire Licensed Contractors and Check Their Insurance

When hiring contractors, ensure that they have the proper licenses and insurance coverage. If a contractor doesn’t carry insurance, the homeowner may be held responsible for any damages or injuries that occur during the project.

Key insurance types for contractors:
- General Liability Insurance: Covers bodily injury and property damage.
- Workers’ Compensation: Covers the cost of injuries that occur on the job site.

5. Increase Coverage Limits if Necessary

Renovations often increase the overall value of your home. As a result, it may be necessary to increase your homeowners’ insurance coverage limits. This ensures that your home is adequately protected once the renovation is complete.

Examples of coverage increases:
- If you’re adding a second story to your home, the replacement cost may increase.
- New appliances, high-end finishes, or custom construction work can increase your home’s value.

Common Risks During Home Renovations

While renovations can increase the value and functionality of your home, they also come with risks. Below are common risks associated with renovations that homeowners need to be aware of:

1. Fire Damage

Construction work that involves electrical systems, welding, or heating equipment can easily lead to fires. Always ensure that your insurance covers the potential for fire-related damage during renovations.

2. Water Damage

Renovations involving plumbing or roof work can result in accidental water leaks or flooding. It’s essential to understand what water damage is covered and to have a proactive plan in place to manage risks.

3. Worker Injuries

Accidents can happen on the worksite, both to contractors and to visitors or homeowners. Ensuring that liability coverage is in place is vital in case an injury occurs on the property.

4. Vandalism or Theft of Materials

Renovation sites are prime targets for theft. Tools, construction materials, and equipment may be stolen, especially if your home is vacant during the renovation.

Pros and Cons of Managing Home Insurance During Renovations

Pros	Cons
Protects your property from renovation-related risks.	Additional costs for extra insurance coverage.
Ensures you’re covered for worker injuries or property damage.	May require significant communication with insurers.
Helps mitigate financial loss in case of unforeseen damages or accidents.	Insurance adjustments can take time and may be complicated.
Increases your home’s protection during high-risk activities like plumbing or electrical work.	Potential need for a temporary relocation, adding to costs.

Conclusion

Managing home insurance during a major renovation is crucial for protecting both your home and your finances. The renovation process can introduce various risks — from water damage and fire hazards to worker injuries and theft — but with proper coverage, homeowners can mitigate these risks. By reviewing your existing insurance policy, updating coverage limits, and investing in builder’s risk and liability insurance, you can enjoy peace of mind throughout the renovation process.

Before beginning any major renovation project, always consult with your insurance provider to ensure that you have the right coverage in place. Whether you’re upgrading a kitchen, adding a room, or completely remodeling your home, the right insurance will safeguard your investment and give you the confidence to move forward with your project.

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Our Authors: Grigor Yovov | Velichka Yovova | Alice Smith at TrendixInsurance

Grigor Yovov
Co-Founder and Senior Insurance Consultant

Grigor Yovov is the co-founder of Trendix Insurance and a senior consultant with over 17 years of experience in the insurance and finance sectors. Specializing in car, home, life, and health insurance, he brings a strategic approach to insurance solutions for individuals and businesses. Grigor is dedicated to providing accurate, insightful information that helps users make well-informed decisions about their insurance needs. His deep knowledge of industry regulations and commitment to transparency ensure that Trendix Insurance readers get reliable, up-to-date content.

Vili Yovova
Insurance Specialist and Consumer Advisor

Vili Yovova is an insurance specialist at Trendix Insurance with extensive expertise in personal and family insurance planning. She focuses on helping users understand complex insurance topics and find the right coverage options for their unique needs. With a strong emphasis on transparency and user education, Vili provides detailed comparisons, guides, and insights into the latest insurance trends. Her user-focused content empowers readers to make informed insurance choices confidently.

Michael Johnson
Research Analyst and Content Writer

Michael Johnson is a research analyst and content writer with a background in financial services and a passion for clear, reliable information. At Trendix Insurance, Michael focuses on analyzing insurance products, policy benefits, and market trends to help users stay informed and make educated decisions. His commitment to accuracy and detail ensures that every article meets Google’s E-A-T standards, supporting readers with trustworthy and expert-backed content.