What to Consider When Insuring Your Home for Renovation

Last Updated on July 1, 2024 by Tanya Janse van Rensburg

A standard home insurance policy is designed to cover the structure of your home and personal property against events such as weather damage or theft.

In some cases, it can also cover detached structures such as fences or sheds. 

When it comes to renovations, your existing home insurance quote may not provide the amount of coverage required.

To ensure you're fully protected, consider adding additional coverage, including home repair insurance.

This type of insurance provides comprehensive coverage during renovations.

It helps protect against unforeseen events, such as damage to your home or business due to unexpected occurrences, allowing you to stay on track with your project schedule and budget.

Materials, work, and other costs related to the renovation can impact the type and level of coverage needed, and in some cases, the type of renovation. 

Photo by Mikhail Nilov from Pexels

How Renovation Affects Rates

While home renovations are considered to have a positive effect on the value of your home, the impact on your home insurance rates may vary.

Changes designed to improve the safety of your home may lower insurance rates, including:

  • Installing interior sprinkler systems
  • Adding security systems such as alarms
  • Upgrading plumbing or wiring
  • Roof replacement or renovation

Other forms of renovation may require you to increase your coverage limits (for example projects involving an increase in liability).

These may include:

  • Building an extension
  • Adding a swimming pool, which may require liability insurance in case of accidents
  • Upgrading your bathroom or kitchen (this can depend on factors such as materials used)
  • Adding a home office (depending on the nature of the business and equipment used)

Insurance Add-Ons

If a home renovation involves a higher level of potential risk, it can be a good idea to consider some coverage options to add to your existing home policy, such as:

  • Contractors insurance, especially if you are hiring a third party to renovate your home.
  • Builders risk insurance to help cover the cost of materials if damaged or stolen.
  • Vacant home insurance: If you are living outside of your home during the renovation or if the property is otherwise left empty for a period of time while work is carried out.

DIY or Contractor?

The type of coverage you use can also depend on who carries out the work. If it is a DIY project, medical payments and liability insurance can help.

Alternatively, if you are hiring a contractor, they (and any subcontractors) should be properly insured with liability and property policies in addition to workers' compensation insurance. 

Whether you are hiring someone to do the renovation or doing it yourself, you will require the correct permits to do the work.

Failing to do so, or neglecting to ensure your property is up to local building and fire codes could lead to your project being shut down by an inspector.

Should I Notify My Insurer?

As a general rule, if your renovation means it would cost more to repair your home after an event than before, it’s a good idea to contact your insurance provider. 

This way you can ensure you are protected against any foreseeable risks, rather than carry out work while under-insured. In addition to taking out vacant home insurance, your insurer may advise that you:

  • Increase your coverage limits both before and following the renovation.
  • Increase coverage for personal possessions.
  • Add a dwelling under renovation policy to cover building materials.

It’s also a good idea to document the progress of your project by taking before, during, and after photos of the project.

This way (in addition to any receipts or contracts you save) you have a visual record to refer back to if required.