By Joe Dyton, WCI ContributorHome renovations can serve several purposes—improving your home, making a property safer, or making a house more valuable. Whatever reason you have for making renovations, the result is usually a positive one. But one potential negative result to consider when making home renovations is your homeowners insurance premium possibly changing.
What Is Homeowners Insurance?
Homeowners insurance protects your home’s physical structure and personal belongings in the event they’re damaged or destroyed in a disastrous event (fire, severe storm, etc.). Homeowners policies also shield you from liability if someone’s injured on your property. Coverage also protects you if you, a family member, or a pet injures someone or damages someone else’s property.
Why Home Renovations Can Affect Your Homeowners Insurance
Whenever you alter your home, there’s a good chance its value will increase. That would make your property more expensive to repair or replace if it was destroyed in a catastrophic event. On the other hand, changes to your home that make it safer could lower your premium—or at least put you in line for a homeowners insurance discount.
More information here:
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Renovations That Could Lower Your Homeowners Insurance Premium
Replacing or Repairing Your Roof
Your roof is crucial when it comes to protecting your house. A newer roof can help lower your homeowners insurance premium because leaks and structural damage are less likely to occur when your roof is in good shape. Using fire-resistant materials or impact-resistant shingles can also help lower your homeowners insurance policy costs.
Improving Your Home’s Wiring and Plumbing
Fire and water damage are two of the most common events your homeowners policy is meant to protect your home from. Both can occur if your house is filled with faulty wiring or plumbing. A wiring upgrade could decrease the chances of a fire occurring—as well as your insurance premium. The same can be said for your home’s plumbing; a newer system can better shield your home from water damage—and make your insurer feel more comfortable providing coverage at a lower price.
Adding Fire Detection and Security Systems
While not the fanciest home renovation, installing an indoor sprinkler system could decrease your homeowners insurance because it can help prevent, or at least minimize, fire damage. Meanwhile, homeowners insurance also covers stolen items, so having a home security system that alerts law enforcement if an intruder enters your home could also help you get a policy discount.
Renovations That Could Increase Your Homeowners Insurance Premium
Adding an Extension
Putting an extension on your home provides more living space, but it will also increase your home’s value. Once your home’s value increases, so does the cost to insure it. That’s because the extra square footage is more area that your homeowners insurance company now has to protect going forward as well as repair or replace if a covered event were to damage it. Discuss your needed addition with your insurer to get an idea of how much more you will have to pay for coverage once the project is finished.
Putting in a Swimming Pool
Adding a swimming pool to your property will also increase your home’s value, but that’s not the only reason you’ll have a higher homeowners insurance premium. A pool also comes with its own set of risks. Remember, a homeowners policy does not just protect your physical home—it also protects you from liability and legal matters connected to your home. A swimming pool could result in injuries and accidents, which your policy would have to cover. You could help offset the policy increase by putting a fence around your pool and covering it when it’s not in use.
Bathroom and Kitchen Upgrades
Renovating your kitchen or bathroom can boost your home’s worth. The higher quality materials used for these renovations, however, means you'll pay more for homeowners insurance. This includes marble or granite countertops, custom cabinets, luxury showers, and top-of-the-line kitchen appliances. The more expensive these upgraded items are, the more it will cost to protect them if they’re ever damaged. Chances are your current coverage might not be enough when the improvements are completed.
Adding a Home Office
Carving out a space in your home that is dedicated to conducting business is a great way to help you focus on your work. It’s also another improvement that could increase your home’s value along with your homeowners insurance premium. Plus, you might need to purchase additional insurance, aka an endorsement, to have more coverage for any business-related equipment or assets, depending on the type of work you’ll be doing.
More information here:
Principles to Consider When Doing Home Renovations
The Bottom Line
Renovations can do so much for your home—give you more space; make your house safer for you and your family; make it look more appealing; and, of course, increase its value if or when the time comes for you to sell it. Just remember that many of the renovations you make could impact how much you will pay to insure your home going forward. Your current homeowners insurance policy is based on your home’s existing square footage, plumbing and wiring systems, appliances, and materials. Changing any of these things will force your insurer to reevaluate how much it will cost to insure your property going forward.
Talk to your homeowners insurance provider about any changes you plan to make before the project. They can let you know if the changes you’re making are covered, walk you through how these renovations will affect your homeowners insurance premium, and share any discounts you might be eligible for to help you save.
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The White Coat Investor may receive compensation from White Coat Insurance Services, LLC; licensed in all states including MA and DC; CA license #6009217; NY license #1758759 (exp. 6/2025); Registered address: 10610 S. Jordan Gateway, #200 South Jordan, UT 84095. This does not affect the cost or coverage of insurance.
