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Does homeowners’ insurance cover risks for home renovations?



The homeowners' insurance covers house renovation risks

Are you planning a major renovation? It is important to consider what may go wrong when updating or renovating your home and hiring professionals to complete your home projects. This article discusses some best practices for hiring contractors and some potential pitfalls to avoid.

Current home renovation environment

It is an expensive time to start a renovation of the house. The recent shortage of the supply chain has pushed up construction costs, and the recent shortage of labor has pushed up wages. In addition, the costs of construction insurance, vehicles, fuel and almost everything else have risen.

As you may guess, these market conditions also increase project costs.

The risks of renovation

When you renovate your home, the risk of getting a claim increases significantly. For example:

  • Having extra people around their property increases the risk of theft and other criminal activity.
  • The use of tools and equipment can inadvertently damage your home.
  • Empty homes during renovation tend to be targets for vandalism and other crimes.
  • Increased pedestrian traffic from workers and delivery drivers can increase the risk of injury and other areas of responsibility.

For these reasons, most homeowners’ policies are designed to limit coverage for certain scenarios, including renovations. However, there are options for filling in the gaps in your regular homeowner’s policy:

  1. Renovation insurance: For a generally higher premium and certain rating changes, homeowners can get coverage for renovation risks. Insurance companies can also ask homeowners to implement certain loss prevention strategies.
  2. Builders’ risk: Unlike a regular homeowner’s policy, construction risk is used to cover a home that is under renovation and may cover personal property, loss of use and liability in connection with a construction.

As a homeowner, it is important that you understand what your home insurance policy covers during a renovation and what gaps you may want to fill before starting work. Talk to your agent to see if your insurance limits need to be adjusted to take into account rising property values ​​and the increased value of your property with the planned renovation. Also find out if your insurance includes a separate deductible.

Best practices to consider

A large part of limiting the risk involves hiring experienced and reputable contractors.

According to Entrepreneur connectionThe five biggest mistakes that homeowners make when hiring contractors are:

  1. Not to verify that a contractor is licensed or insured: A professional contractor should have both a contractor license and a business license. Make sure your contractor has both general liability insurance and occupational injury insurance. Ask if subcontractors have their own insurance or if the project will be insured with a settlement policy.
  2. Does not check references: It is important to get an idea of ​​an entrepreneur’s work history. More specifically, ask for a reference to a previous project that is similar to your project.
  3. Not to get a quote on the spot: It is very difficult for a contractor to assess the cost of a project over the phone. Make sure they can see your home in person.
  4. Only with regard to the bid price: Even if you save money, you want to make sure that the contract contains everything you demand with the quality you want.
  5. Hire a nice contractor: It is important to network with professionals. But in the end, the quality and service of the work performed is most important.

Taking these extra steps when hiring contractors for your home renovation is an important way to avoid substantial insurance costs along the way.

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Changing market trends have a significant impact on the construction sector. Interest rate increases for insurance affect the labor market, which makes it more expensive to hire contractors for home renovations. Now, more than ever, it is important for homeowners to understand their homeowners’ policies and consider the steps they should take to avoid extra expenses during a home renovation.

Do you want to learn more? Contact a BNC insurance agent today to review your coverage.




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