Does Homeowners Insurance Cover Renovations? What your broker needs to know

Much like your lawyer, your insurance broker needs to know your plans to properly protect you.

Buying a fixer-upper can be an exciting prospect for many, bringing an opportunity to put your personal style stamp on the property. 

In 2020, 76% of homeowners made at least one home improvement, while 58% of homeowners undertook a major interior renovation.

Like your lawyer, your insurance broker needs to know all the details to properly protect you

Some people fear telling their insurance broker their home renovation plans will drive up the policy cost. 

However, not disclosing your plans could lead to denied claims, cancelation, and bigger expenses should anything happen. 

The renovation we’re talking about here is not painting a room or putting in new carpet. It’s the full-scale, ripping out walls, putting in new baths and kitchen kind of thing. 

Buying a home that you plan to renovate and not live in affects risk, eligibility, timeframe, coverage, and yes, budget.

We just bough a fixer-upper. I have homeowners insurance – but didn’t tell my broker about my renovations plans.

Here’s how that can play out. 

We recently underwrote a home and the insured told us they were not going to renovate. 

We found them a great policy for an owner-occupied primary residence. 

Upon inspection, it was determined that the house was vacant and undergoing major renovation. That posed a huge problem for the carrier – they had written a policy for an owner-occupied primary residence and they did not want to take on this risk. 

The result: the policy was canceled. 

Now the homeowner is scrambling for coverage and without access to markets they would have had from the beginning if they had been upfront with their plans.

Why not disclosing a renovation is an insurance risk

The issues? 

First, vacancy. 

Once the construction crew goes home at the end of the day, the home is vacant and at greater risk for fire hazard, theft, and vandalism. 

Second, liability. 

Laborers working with heavy equipment bring greater opportunity for accidents and injury. 

Third, structural integrity. 

Are you removing load-bearing walls? If your contractor doesn’t support them properly, the integrity of the home can be compromised. That can causing problems in the future.

Insuring a home under construction is a very different prospect than an owner-occupied home. Many carriers do not want the risk. 

Especially if the renovation isn’t discovered until the course of construction is already underway.  

Letting your broker know before hand let’s them assess your risk level.

There are different coverages that apply for different construction/renovation types: 

• dwelling under renovation coverage
• vacant home insurance
• contractors insurance

Getting the right insurance for your fixer upper

Tell your broker your plans. They can steer you to proper coverage from the start so you’re protected in the event of a claim. 

Tell your broker what you’re having done and your budget so they can make the right call for you. 

If you have established that relationship, it’s easier to pick up the phone later if something happens.

Is your home is vacant for more than a 30 to 60-day timeframe?

With a standard homeowner’s policy you begin to lose coverage, and theft is the first to disappear. 

Many homeowner’s policies state if a home is vacant or unattended for a certain period and there is a fire, there is no coverage. 

Renovation aside, if you leave your home unattended – perhaps to go south for the winter – make sure your home is being cared for while you’re away. 

Have a caretaker check on it periodically, arrange to have mail collected, and make sure the heating system is maintained.

Let your insurance broker know about remodeling, too

What if you’ve lived in the home for a while, then decide to do a major renovation, addition, or put in a new kitchen or bath? 

It still pays to let your broker know – have a dialogue and know what’s covered upfront to avoid claims headaches. 

They can make a note in your file and modify your policy to include proper protection for construction risk if necessary. 

If your renovation adds a significant amount of value to the home, you’ll want proper coverage to protect it during and after construction.