3 home renovations that can increase your insurance costs
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Don’t upgrade your home without understanding how insurance costs will be affected.
Home insurance premiums are influenced by many factors.
Certain changes to a home can increase insurance premiums.
This can include adding a swimming pool or adding on to a house.
Having sufficient home insurance coverage is crucial to protecting assets. A home is many people’s most prized possession and it is important to ensure that it is fully covered. This means paying the necessary premiums for the right kinds of insurance protection.
Many consumers assume that once they’ve purchased coverage, they’re all set. Sometimes, however, home improvements may require a change that increases insurance premiums. It is important to be prepared before remodeling to understand how an upgrade may affect insurance costs.
In particular, here are three upgrades that consumers should be aware of that could increase their home insurance rates.
1. Put in a pool
Adding a swimming pool can increase insurance premiums for several reasons.
First, consumers will need to ensure that their home and outbuilding coverage includes the swimming pool. Otherwise, they would have to pay out of pocket if damage to the swimming area occurs, which could cost tens of thousands of dollars. Consumers may need to add additional coverage and increase the amount of their home coverage to ensure that covered issues with the pool can be paid for by an insurer if something goes wrong.
Swimming pools can also create an additional risk of someone getting hurt on the property. After all, swimming pools are attractive to intruders – including children – and there is a risk of unwanted guests and visitors drowning or otherwise injuring themselves as a result.
Home insurance companies charge more for liability protection when there is a greater risk of loss from a swimming pool. And owners may want to increase the limits of their liability policies to ensure that assets are protected against this new risk, which can lead to even greater cost increases.
2. Add space for a home business
Many people switched to working from home after the pandemic. For consumers adding a home office with specialized equipment, it may be necessary to purchase additional insurance to ensure the equipment will be covered. Standard policies generally limit home business protection to around $2,000 to $2,500 by default, so buying more than that amount of coverage will increase premiums.
Home insurance companies may also exclude liability protection for business-related injuries, or may charge more for additional coverage. It is important to ensure that visitors are covered when customers come to the house.
3. Adding an addition to your home
Finally, adding an extension to the house or carrying out a major renovation can increase the cost of rebuilding the property and thus require greater insurance protection.
Homeowners should generally have replacement cost coverage for their home insurance to ensure that their properties can be restored to their original condition in the event of major damage or the total destruction of the property. A larger property with improved features or facilities will naturally cost more to rebuild, so cover limits will need to be higher and premiums will also increase.
It’s important for owners to understand how these changes affect insurance rates, and those making these upgrades should alert their insurers as soon as possible to ensure they have the right protections in place should anything go wrong.
Choosing the right home insurance to protect you
No matter where you live, insuring your home is essential to protecting your finances in the event of an unforeseen incident. Whether it’s a natural disaster, accident, burglary, or something that causes damage to your property, you want to know that you have the right home insurance coverage for your situation.