Home Values and Renovations

Published on January 29th, 2015

How renovations affect your homeowners insurance

While home renovations are sometimes a necessity, it’s important to understand that these updates have the potential to completely change the value of your house.

When you buy a home, you also purchase homeowners insurance. This insurance covers your property and can help homeowners rebuild or recoup after a disaster. While applying for insurance, insurance companies often closely examine costs, the true value of the home, and decide on coverage limits that can cover a home in case there is damage to the property. This is why so many homeowners are sure to update their insurance company on any renovations they’re making or have made.

While getting insured during a renovation can be a process in itself, here is a quick list that offers an idea of the effect simple renovations can have on your home’s value and on its insurance coverage.

  • Roof Repairs: Updating the roof over your head? Since renovating your roof can lower your premiums anywhere from 10 to 20 percent, this is often an update that is worth the investment. Most of the time, the newer the roof, the more insurers will contribute to repair or replace it.

  • Outdoor Upgrades: If you’re looking to cool off with a new pool this summer, you may want to hold off. A standard policy involving a swimming pool usually starts off with a $100,000 liability protection (on average). Adding to your expenses, your insurer may require you to install a fence with a lock around the pool as well.

  • Home Office: If the spare room is looking like a great work-from-home office, keep in mind that a separate business insurance policy may be required. Standard home insurance policies often don’t have coverage for any business-related losses.

  • Kitchen Remodels: Remodeling the kitchen is one of the most popular renovations to modernize and customize a home. It also has the potential to boost your home’s value. Whether you’re doing the work yourself or hiring a professional, it’s important to make sure everything is covered—for damage to the property and/or workers’ compensation insurance. After all the work is said and done, most homeowners would rather spend a little extra every month for coverage, than pay a large amount out-of-pocket for any damages or injuries.

  • Garage Renovations: If that garage is looking more and more viable as a living space, make sure you consider all of the aspects of this project. Not only do you have to get the proper work permits to renovate a garage, your car insurance may increase if it’s no longer being stored in a garage.

  • Basement Updates: In the same vein, if you’re remodeling an unfinished basement, you may need extra coverage for water damage if the sump pump is also in the basement. With unique areas of the house like basements, there are different coverages that may need to be implemented.

  • Adding Space: Adding square footage to a house always has a direct impact on home insurance coverage, so make sure you have all details ironed out with your insurer (in case of issues during construction).

  • Overall Upgrades: If you have an older home, consider making upgrades to outdated electrical or plumbing. Regardless of the age of your home, upgrading your security system is also a smart investment. Plus, some of these upgrades may qualify you for deductions on your homeowner’s insurance policy.


One of the most important rules of any renovation is to keep all upgrades and changes to your house logged with your insurance provider.

If you’re thinking about implementing these updates in preparation to sell, it’s best to start with speaking with a qualified mortgage professional. For more information about financing a home, please feel free to contact one of our Housing Buzz Team members.

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