How to Adjust Your Home Insurance Policy When You Renovate


Before you start your next home improvement project, you should understand what the implications are for your home insurance policy. Any time you renovate, replace, or repair part of your home, you change the value of the insured property. This covers a wide range of changes; from fitting a new house alarm to building a conservatory, it can all have consequences when it comes to your insurance policy and the premiums you have to pay.

These tips will help you navigate your insurance policy when you renovate, whether it’s a DIY project or you are hiring professionals.

Informing Your Insurer About Renovations

Anytime you renovate your home, you should tell your insurance company about it before starting the work. Renovations change the value of your home and the cost of any repairs because you are changing the risk that the insurance company had initially agreed to insure

Your insurance policy pays for the materials and labor that go into repairs. If you add an extension, put in a new roof, upgrade your kitchen or bathroom, or install new floors, it changes your fire insurance claim calculation should you have to make one in the future.

In some cases, your coverage limits may not be enough to cover all of the new changes because your policy is based on outdated measurements and drawings of the structure of the home. In some cases, you might even have the claim denied outright if you neglected to inform the insurance company.

Renovations That Could Reduce Your Premiums

Not all home improvements will raise your insurance costs. Some improvements or repairs you make can even reduce your premiums because they reduce the risks to your home.  Below are some of the best improvements you can make to your home to reduce the risk of loss:

  • Upgrading your roof to reduce risks from weather events and wildfires
  • Adding a fire sprinkler system
  • Installing a monitored house alarm system to cut theft risks
  • Updating electrical wiring
  • Upgrading old plumbing
  • Installing a sump pump or backwater valve to reduce sewer backup risks
  • Installing a water shut-off device that can automatically detect leaks and cut the water when you have a burst pipe

The right renovations can make your home more resilient, and your policy should reflect that.

Home Improvements That Raise Your Premiums

There are other renovations that may raise your premiums, either because they increase the risk that you will make a claim or because they increase the replacement costs. These renovations include:

  • Installing a swimming pool or hot tub, which can raise your liability risks in case of injury
  • Adding a rental suite, as insurance rates may be higher for multi-family dwellings
  • Expanding your space by adding an extension
  • Upgrading your kitchen or bathroom with newer and more valuable materials, fixtures, and appliances

Make sure you consider these additional costs before starting your renovations.

Don’t Neglect Repairs

When you notice a problem with your home, do not delay before repairing it, or it could cost you more out-of-pocket. One of the most common issues with insurance claims is negligence.

Homeowners who neglect home repairs may have their claim denied when they need it the most. For example, if you notice water marks on your ceiling but you don’t inform the insurance company and take steps to repair the leak, you could be stuck paying out of pocket if a heavy rainfall causes more extensive damage.