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Can Renovations Affect Your Homeowners Insurance?


According to a Bank of America survey, 70% of Americans have embarked on or will carry out major or minor home renovations in the near future. Low-interest rates and demand for extra living spaces have fueled this uptick in home remodeling projects since the onset of COVID-19 in 2020. While a facelift or an additional structure can make your residence more enjoyable and boost your home’s curb appeal, it can also increase or decrease your homeowners’ insurance premiums.

Here’s how renovating your home can impact your main dwelling and personal property coverage costs.

How Does Renovation Affect Homeowners Insurance?

If you’re going to plan a major home improvement, such as renovating your kitchen or bathroom, it’ll affect the value of your property. Minor upgrades like flooring and painting projects also impact your property’s replacement cost. Once the replacement value of your home changes, you might end up underinsured unless you invite an insurance agent to audit all the changes and update your policy accordingly.

Generally, your existing homeowners’ insurance policy won’t automatically cover most features or structural upgrades to your property. That’s because the policy for which you’re currently paying premiums is only meant to cover the replacement or repair of your primary dwelling place and personal property as originally documented and evaluated. Any features not listed in your policy document won’t be protected in case of a covered peril, such as fire or storm damage, occurs.

Once your insurer has reviewed your renovated property, they’ll determine whether to increase or decrease your insurance premiums. Their final decision will depend on whether the upgrade increases or decreases the covered risk or liability.

4 Renovations That Can Cause Your Homeowners Insurance to Increase

Your home insurance premiums will certainly go up after improvements such as:

  • Building an in-ground pool– If this structure is damaged by one of the covered hazards, your policy can pay to repair it. As such, your insurer assumes a greater risk by covering your new in-ground pool. If you need liability coverage against pool drowning accidents, you’ll also have to pay more for the additional protection. A bathtub and other features involving water have a similar impact on your premiums.

  • A new home office-If your clients or business partners start visiting your new home-based premises, your third-party liability requirements will increase. Your premiums will also increase to cover the slip, trip, and fall injuries, and similar liabilities that might be incurred after building your new office.

  • Expanding your living spaces-If you increase the size of your main dwelling, such as by adding a lounge, your coverage requirements increase, too. The extra square footage introduces a greater possibility for property damage.

  • Kitchen remodeling– New and more expensive kitchen cabinets or appliances can affect replacement costs for your primary dwelling and personal property. Your homeowners’ insurance costs will go up accordingly to maximize your coverage.

Home Upgrades That Decrease Your Homeowners Insurance Premiums

Your premiums will likely come down after making home improvements that reduce your insurer’s risk and liability. Such renovations may include:

  • Building a damage-proof roof
  • Basement insulation to minimize the risk of structural damage
  • Deck renovation
  • Security improvements, such as installing a home surveillance system
  • Fire protection system installation
  • Installing new windows

These are some of the ways in which renovations will affect your home insurance premiums. Are you looking to safeguard your funds or property until the satisfactory conclusion of a pending real estate transaction? If so, contact our professionals at Brighton Escrow today.

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