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Getting to design your dream home from the ground up and watching it come together right before your very eyes is an exciting process. If you're planning on partnering with a contractor to help you construct your dream home from scratch, you may be wondering how to protect your beautiful new home from start to finish.
Will homeowner's insurance cover me during construction?
Getting to design your dream home from the ground up and watching it come together right before your very eyes is an exciting process. If you're planning on partnering with a contractor to help you construct your dream home from scratch, you may be wondering how to protect your beautiful new home from start to finish. Does a standard home insurance policy cover my house even before it's fully built? The short answer is no. There is a special type of insurance policy designed precisely for that – a builder's risk policy.
A builder's risk policy is a specific form of insurance that is designed to protect your home during the course of construction, whether that be a small remodeling project or covering the entire home building process. While a homeowner's policy is designed to protect the completed structure, a builder's risk policy specifically covers properties under construction and the unique risks that go into them. Homes undergoing some sort of construction are usually deemed to be inherently riskier. This is because construction crews add more foot traffic to the property, increasing liability exposure is more foot traffic on the property due to construction crews working there and that things like the theft of building materials now becomes a risk that is not normally a day-to-day concern. To make sure that your home is protected from start to finish while being built, ask your insurance agent about the benefits of getting a builder's risk policy.
Will home insurance cover me during renovations?
Inspired by HGTV and an influx of DIY home project videos on social media, many homeowners are making a pit stop at Home Depot on their way to embark on their new home renovation project. Many homeowners, however, don't realize that most home insurance companies are not fond of certain home improvement projects. Because they're usually asking which shade of grey looks best in their new mud room, these DIY warriors commonly forget to ask, "Will my insurance cover us during the course of our renovations?"
Your home insurance policy will continue to cover your home in the event that you are doing what we consider "minor cosmetic renovations." Kitchen and bathroom remodels, painting, and other similar projects are not a main concern of your insurance policy. Your home insurance company starts to get nervous when you plan on knocking out a load-bearing wall or adding an additional wing to your home, since the construction project itself has a greater chance of something going wrong. Before you undertake an extensive renovation project on your home, give your insurance agent a call and run your plans by them to see if anything stands out from their perspective.
How do renovations impact my insurance?
A builder's risk policy is the safe bet when it comes to answering the question of, "How do I insure my house during the course of construction?" but not all home insurance companies have the same underwriting rules when it comes to minor renovations. Some may allow you to add a special endorsement for an additional premium to specifically cover your property in the event that it is under construction/renovation, but other carriers don't want anything to do with that risk at all.
In the event that you do make updates to your home, it's also a good idea to call your insurance agent and let them know so that they can make sure you're still properly insured. Renovating your bathrooms and kitchen, adding square footage to your home, and a number of other common home improvement projects can directly affect the estimated replacement cost of your home, and if no adjustments are made to your current policy, then you may be left underinsured. For example, if you put a pool in your backyard, but don't ask your insurance agent to increase their Other Structures coverage, the brand-new pool you just installed would not have coverage. To ensure you take all the necessary precautions before beginning your next project, call your home insurance provider to see where they stand on the matter.
Article written by: Agent: Matthew Stalvey
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