Can home improvement projects lower your insurance rate?
Some home improvement projects may lower your insurance rate, but these are typically projects that make your home safer and reduce the risk of a claim. Roof replacements generally earn you a lower rate since the age of your roof, and the material it's built from are key cost factors for your dwelling coverage. Other projects, such as additions or renovations, may increase the value of your home but come with a higher insurance rate to cover the increased cost of repairing or rebuilding your home.
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Home improvements that may lower your homeowners insurance rate
These projects may help lower your homeowners insurance rate, but keep in mind that insurers use a variety of rating factors to determine your rate and may not offer the same discounts.
Replacing your roof
Replacing your roof is one home improvement project that may lower your rate, especially if your current one is getting up there in years. As your roof ages, the materials start to break down and pose a greater risk of leaks and water-related damage. If your roof uses asphalt or wooden shingles, then you may save even more by switching to a more durable material, such as metal or slate. Learn more about how roof type impacts your homeowners insurance.
Upgrading your wiring
If your home has outdated electrical wiring, such as knob-and-tube wiring, then upgrading to modern Romex wiring may reduce your premiums. Outdated wiring generally has a higher risk of causing a fire, so replacing it with modern wiring can save money and make your home much safer. Likewise, upgrading your electric service and breaker panel to handle modern appliances and electronics could make your home more attractive to potential buyers.
Have an older home? Learn why older houses may have higher insurance rates.
INFORM YOUR INSURER OF MAJOR HOME IMPROVEMENTS
You should always give your insurer a heads up about any major home improvement projects that may raise or lower your insurance premium. Some insurers require you to do so, but it's worth doing either way so you have adequate coverage to repair or rebuild your home with your new addition, room renovation, or other improvements factored in. Plus, you may earn discounts for some home upgrades.
Does homeowners insurance cover home renovations?
Home insurance can cover you for injuries or theft that occur during your home renovation, but it doesn't pay for actual home renovation projects. Home renovation projects can be expensive and may require a home equity line of credit through your mortgage lender or taking out a personal loan to help make them possible.
Remember, your policy is there to cover the cost to repair or rebuild your home after it's damaged or destroyed by a covered peril, and only up to the condition it was in before it was damaged. Any improvements you made to the house prior to the damage may be covered if you updated your policy accordingly, such as increasing your dwelling coverage limit to account for higher-quality building materials, an addition, etc.
After any home improvement project, but especially after a home renovation, be sure to contact your homeowners insurance provider to update your dwelling coverages to ensure you're not underinsured.
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