Although we all understand the importance of homeowner’s insurance, many homeowners never think about insuring their home improvement projects. Before you invest a boat load of money in home renovations, it’s critical that you insure your project. Otherwise, you could leave yourself vulnerable to some serious financial stress.
Before you don your hard hat and get to work on that home improvement project, take these four simple steps to make sure you’re protected:
1. Give your insurance agent a call.
There are so many things that can go wrong during a home improvement project. For example, what if your beautiful new kitchen cabinets are stolen from your backyard before you’ve had a chance to install them? What if a rainstorm causes damage to your floors during a major re-roofing project?
Your plain vanilla homeowner’s policy may not cover any damage done to your home during renovations. This is why it’s so important to call your agent and find out what’s covered during the construction process. You may find that you’ll need to change your insurance coverage temporarily until the renovations have been completed.
Tell your insurance agent exactly what kind of home improvement project you have planned. He or she can walk you through your short-term coverage options to make sure you’re fully protected.
You probably won’t need any additional insurance coverage if the project is relatively small. For example, if you’re simply switching out a couple of appliances in your kitchen or replacing fixtures in your bathroom, there’s probably no need to call your agent. However, if you’re spending more than $25,000 on a home renovation, you should definitely call.
2. Work only with insured contractors.
If you’re planning on hiring a contractor to work on your home renovations, you’ll need to look for more than just an experienced company. You’ll also want to make sure the company has general liability insurance as well as workers’ compensation for its employees. Ask the contractor for a certificate of insurance to confirm their coverages.
While you may be tempted to hire a cheaper contractor who lacks insurance, remember that you’re taking a huge risk in doing so. If something goes awry during the project, you could be stuck with a hefty bill. On the other hand, when you hire an insured contractor, you will not be held liable if a worker is injured during the project. Plus, you’ll be covered if the contractor causes any damage to your home during the project.
3. Obtain the proper permits.
Depending on where you live, you may need to obtain building permits before you begin your home renovations. Typically, permits are required if you are altering the structure of your home, such as adding on a room or a deck. Contact your city or county government offices to find out whether or not your home improvement project requires a building permit.
If a building permit is necessary, you or your contractor will need to apply for the permit and adhere to the specified building codes. Once the job has been completed, a building inspector will come by to check out the renovations and ensure that everything is up to code.
It’s extremely important to obtain the proper permits when necessary. If you add a room to your home and it does not meet your local government’s building codes, your insurer may not cover the extra room.
4. Update your insurance policy.
Once you have finished your home improvement project, contact your insurer to determine how much value the change has added to your home. This is extremely important. If you do not notify your insurance company about an expensive addition, you’ll be grossly underinsured if something happens to your home.