6 Home Renovations That Could Jack Up Your Home Insurance Premiums

by Shelley Frost
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Ready for home renovations? Not so fast! Before you reach for your tool belt, make sure you understand the full impact of what you're about to do.

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Sure, you get to enjoy your newly upgraded space, but you could also get slapped with a newly upgraded home insurance premium. Consider how certain home renovation projects affect your home insurance rates before you make plans to remodel.

What Are Some Home Renovations That Could Increase Your Home Insurance Rates?

Several home renovations can cause your home insurance rates to increase. Sometimes, it's because the remodel increases the replacement cost of the home if you experience a loss. Other home renovation projects come with additional risks that cost more to cover on your homeowners insurance.

Here are the most common remodel projects that could force you to pay a higher home insurance premium each month.

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1. Installing a Swimming Pool

Having a swimming pool in your backyard makes it easy to relax or throw the best parties on the block, but a pool is also a risky addition to your property. You're liable for any injuries that happen in the pool, which means you'll likely need to carry higher liability insurance. That results in higher home insurance rates. You might also want an umbrella insurance policy, which offers higher liability coverage above your homeowners insurance limits.

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2. Building an Addition

When you need more space but don't want to buy a new house, an addition could be the best solution. However, that extra square footage means you'll have more home to insure. If something happens to the home, there's more house that has to be rebuilt. Your dwelling coverage will likely go up, which will cause your home insurance rates to increase.

You'll also have more furnishings in those areas, so it'll cost more to replace them if you face a total loss. Increasing your personal property coverage can give you a high enough limit to cover those new items, but you'll pay a higher premium for the higher limits.

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3. Finishing Your Basement

If you have an unfinished basement, you can claim more square footage by finishing it. Your insurer might increase your rates once you finish the basement, since it's now a livable space that will cost more to replace. Basements have a higher risk of flooding or water damage, which makes them a higher risk for claims.

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4. Making High-End Upgrades

Finally ready to say goodbye to that avocado green kitchen you've been rocking for decades? Kitchens and bathrooms are prime targets for a remodel. If you're doing a major overhaul with several high-end finishes, you could pay more to insure your home. Those new, more expensive materials will cost a lot more to replace if something happens to your home.

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5. Adding a Fireplace

Before you get too excited about curling up near a cozy fire, consider what a fireplace might do to your home insurance rates. With the increased risk of a fire, you might also find yourself with an increase in your insurance bill.

6. Building a Detached Feature

Not all home renovations have to be directly related to your existing structure. If you build a new detached structure, such as a gazebo or garage, you'll also see an increase in your home insurance premium. The higher rates pay for coverage for that new building on your property.

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Should I Tell My Insurance Company About Renovations?

It's a good idea to talk to your home insurance provider before you make any changes to your home. They can tell you how the renovations might impact your premiums. You might also need special coverage to protect your home during the renovations or additional endorsements to protect your home after the work is done.

Notify the company once the renovations are complete so they can adjust the coverage when necessary. If you don't inform your provider about the changes, they might not cover losses completely. You might pay a little more in insurance premiums by informing your insurer, but you're also protecting yourself financially from major losses.

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