Home Insurance and Renovations

Woody Allen once said: “There are worse things in life than death. Have you ever spent an evening with an insurance salesman?”

But if you are planning a renovation to your home and don’t take the time to speak to your insurance broker, you could be making a big mistake. During and after a renovation, your current policy may not cover your home and contents if something bad happens.

“Before you pick up a hammer or drill, it’s important to understand and learn more about the insurance implications of upgrading your home,” says Dave Minor, vice-president at TD Insurance. “While being handy around the home is convenient for upgrades such as painting or installing crown molding, more challenging projects like tackling the electrical work yourself could actually invalidate your insurance policy. Speaking with your insurance provider can be a quick way to help clarify the unknown.”

Generally, a homeowner’s policy allows for minor repairs and renovations without jeopardizing coverage. However, if you are doing the renovation work yourself, or acting as your own general contractor, you may need to arrange for additional coverage because some policies have a standard exclusion related to professional liability. You may not be covered if someone is injured on your property.

If you are hiring a contractor, ask them for proof of liability insurance. Check out the limit and extension of the coverage and the date the policy expires. Then ask your insurance broker to make sure that between the contractor’s insurance and your policy, you are well covered.

Upgrades requiring extensive work, such as adding an extension to your home, may require you to change your entire policy to a building under construction. If you are not living in your home during renovations, it becomes an easier target for thieves and undetected water damage, which is why your insurer may require you to secure a vacancy permit if you move out for a period of time.

Basically, all homeowners should insure their houses according to what it would cost to rebuild the house and replace its contents in the event it is destroyed. This amount is called the replacement cost, and is different from the market value of your home and even from your tax assessment value. Another consideration is if you have changed the way you use the home, such as adding a basement apartment or a separate addition to rent out. If your policy doesn’t reflect these changes, you may not be covered at all.

It all boils down to having the right insurance. Not too much and not too little. I’m happy to be affiliated with Weichert Realtors and we have an insurance division to help new buyers and sellers evaluate their homes. For more information, please contact me anytime by visiting my website at http://www.NormaSellsNJHomes.com.


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