5 steps to follow before you get started
If you’re getting ready to do a home makeover, you might be so caught up in plans and budgets that that you’ve forgotten a few important issues … namely, your homeowner’s insurance. Make sure you go over these 5 things before jumping into a remodel.
1. Notify your insurance company before the first hammer falls
Whether you’re remodeling a kitchen, adding an extra room, or you’re doing a total home renovation, make sure the project is covered by your insurance policy. The right homeowner’s policy will keep you covered in the event of any surprising damages. In addition, failing to disclose remodeling plans to your insurance provider could result in your policy being cancelled.
2. You may need to change your coverage after the renovations are complete.
Adding space, upgrading electrical systems, adding a pool and other upgrades could increase the value of your home, which might mean you need to increase your coverage. Speak to your insurance agent to see if the planned changes will affect your policy. If you’re unsure of your home’s value, consider looking on websites such as Zillow.com or Realtor.com, which can show what similar homes in your area are worth.
3. Check to ensure your contractor has adequate insurance.
It’s not enough for you to have insurance; licensed contractors need their own independent coverage. Ask to see the contractor’s Certificate of Insurance (a physical copy is even better than digital) so you can see what kind of insurance he or she has.
Contractors should have the following coverage:
Workers’ Compensation: If the contractor or a worker is injured on the job, you could be held liable, leaving you vulnerable to a lawsuit. Workers’ Compensation on the part of the contractor will help cover medical bills or lost wages in the event of an accident.
General Liability: This can protect you in the event of accidental property damage to your home or a neighbor’s property.
Builder’s Risk: If uninstalled appliances, furniture, or other materials are damaged, this policy can cover the loss and help replace them.
4. Confirm subcontractors also have insurance coverage.
On larger home renovations, the general contractor may subcontract builders, electricians, and plumbers. Don’t assume these people are covered under the general contractor’s policy. According to National Association of Realtors, “Because these employees don’t work for the contractor full-time, they’re typically not included in their workers’ compensation policy … verify that subcontractors have liability insurance.”
5. Check that the contractor has completed operations insurance.
Here’s an issue you might not have considered. What happens if the work on your home is finally completed and then something breaks down? What if damage occurs as a result? Or what if there is faulty work on the part of the contractor or a subcontractor? According to the National Association of Realtors, “If carried by the contractor, completed operations insurance could help pay to repair or replace damaged property resulting from faulty work.”
An added note for do-it-yourselfers
Be aware that if you decide to do the renovations yourself, you also assume all the risks. Make sure your insurance policy has adequate coverage for injury liability or property damage in case anything goes wrong. If you will be hiring subcontractors to do electrical or plumbing work, you need to make sure they have workers’ compensation coverage. If they don’t have coverage – or you hire a friend or relative to do the work – and an injury occurs, you could be held liable for medical bills or lost wages.
These tips regarding your homeowner’s insurance and renovations can help you avoid financial trouble down the line. If you have questions about how home remodeling could affect your policy, contact Avante Insurance today.