By Ann Robinson and Annie Vernon
There is a step in the remodeling process that homeowners often neglect: insurance.
Yes, we know it’s a very boring detail and just one more thing that might cost you money at a time when you already feel bled dry. But it would be tragic for something to happen during or after your remodel and not have the proper insurance in place.
We’ve found that many homeowners don’t think much about the insurance that might be necessary during a large remodel. Some assume their current homeowners’ policy covers it, and others just don’t let the thought of insurance break through the excitement of designing a new kitchen.
Remodeling projects usually add value, which means homeowners need to increase their insurance coverage. During the remodel of this home, above, a master suite and mudroom were added, below left, increasing the value and insurance needs.
But it is important to take the time to understand your policy and learn about your contractor’s coverage to make sure the project is properly insured.
When selecting a contractor, ask about his or her insurance status. Ask to see a certificate of insurance. The certificate is issued by the contractor’s insurance company and will tell you if the policy is current and what the liability limits are. You can also ask that the insurance company add your name temporarily to the policy so you are assured access to it should any problems arise during the construction.
You should also make sure your contractor has workers’ compensation insurance. This type of insurance covers injuries to workers on the job, which in this case will be workers in your home.
Make sure you understand who will cover any weather-related damage that may occur during your remodel. If the roof or walls of your home will be removed and the home exposed to the elements, it is important to establish up front if the contractor’s policy or your homeowners’ policy will be responsible for weather-related damage that may occur.
A master suite and mudroom were added, increasing the value and insurance needs. Homeowners should check their policy as well as their contractor’s coverage.
You should also understand whose policy will cover equipment delivered to the site. For instance, if appliances are delivered, you should know whose insurance will cover them if they are damaged or stolen before installation. Typically a homeowners’ policy will not cover weather-related damage or theft during a remodeling project.
If your project is a do-it-yourself job, you should ask your insurance agent if you need builder’s risk insurance. Many remodeling projects are undertaken by family members or friends, and it is rare that they would have the proper personal insurance for the job. If you are moving out of your home, ask your insurance agent if your homeowners’ policy will continue to cover you, the home, or both. If you are out of the house for more than 30 days, you may need a vacancy endorsement on your policy.
Finally, when the remodel is done, all the time, effort and money you have put into your project have (hopefully!) added value to your property. Meet with your agent as the project is concluding to increase the coverage in your homeowners’ policy so it will be consistent with the new value of your home.
It would be wise to make sure your policy covers 100 percent of the replacement cost of your newly remodeled home. After all the time and effort you have put in to achieving your dream home, don’t neglect the final step of protecting it from disaster in the years to come. As always, we welcome your home architect design questions at firstname.lastname@example.org.