Does Homeowners Insurance Cover Renovations?

Home renovations can be exciting—but they're also financially and logistically complex. Whether you're adding square footage, updating a kitchen, or converting your garage into a home office, you’ll need to revisit your insurance coverage. Does homeowners insurance cover renovations? The answer: It depends.

Your standard homeowners policy may not automatically adjust to reflect your home's increased value or risk. Some renovations could even void parts of your policy unless you inform your insurer ahead of time.

This guide outlines what you’re covered for, what you’re not, and how to protect your home, finances, and peace of mind during and after renovations.

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How Renovations Impact Homeowners Insurance

Your Rebuild Value Will Change

Homeowners insurance is designed to cover the rebuild cost—not the market value—of your property. When you renovate, especially with high-end materials or appliances, that cost increases. For instance, upgrading your kitchen with granite countertops, luxury cabinets, and built-in appliances may raise your rebuild value from $200,000 to $260,000. If your insurance isn’t updated, your payout in a total loss (e.g., from a fire) could fall far short.

Premiums May Go Up (Or Down)

Renovations that increase the home’s value or liability (like pools or additions) will usually raise your premium. On the other hand, improvements that reduce risk—like replacing a roof, updating wiring, or installing a security system—may qualify for premium discounts.

Unreported Renovations Can Leave You Underinsured

If you renovate and don't inform your insurer, you risk being underinsured. In a disaster, your claim could be capped at pre-renovation limits, leaving you to pay the difference out of pocket.

When Does Homeowners Insurance Cover Renovations?

Standard homeowners policies do not directly cover renovation expenses. They’re not designed to pay for elective remodeling. However, they do cover:

• Your home’s structure (dwelling coverage) in case of damage
• Liability claims from injuries on your property
• Your personal property during standard risk events (e.g., fire or theft)
  
  

But these protections are only valid if:

• Your policy reflects the renovated home’s value
• You’ve disclosed the renovations to your insurer
• Your home isn’t classified as “vacant” during construction

Types of Renovations That Affect Your Insurance

1. Home Additions

Adding square footage is one of the most impactful renovations. Whether you’re building a sunroom, second story, or family room, this will increase your rebuild cost significantly—and should be reported before construction starts. Once you have architectural drawings, share them with your insurance agent.

2. Major Kitchen or Bathroom Remodels

Even without increasing square footage, upgrading fixtures and finishes affects coverage. Your agent will likely ask about:

• Countertop materials
• Appliance grades
• Flooring types
• Cabinetry quality

These factors influence your home's replacement value.

3. Pools, Hot Tubs, and Saunas

These luxurious additions come with higher liability. You’ll likely need:

• Increased liability coverage
• Fencing, safety alarms, or nighttime lighting (required by some insurers)
• Possibly umbrella insurance to protect against major injury claims

4. Roof Replacement

A new roof may reduce premiums—especially in high-risk areas like hurricane zones—if you choose impact-resistant materials. Likewise, installing modern windows or locks could lower your rate.

5. Home Office Additions

If you operate a business from home, homeowners insurance may not cover:

• Liability for clients visiting your property
• Business equipment or inventory

 You may need separate business or commercial property coverage, depending on what you store and who visits.

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Special Insurance Options for Renovation Projects

1. Builder’s Risk Insurance

Covers:

• Construction materials (on-site or in transit)
• Theft, fire, or storm damage
• Structural damage during construction
  
  

Ideal for:

• Major renovations
• Home additions
• Long timelines or extensive labor
  
  

Some homeowners policies offer it as an endorsement, while others require a standalone policy.

2. Vacant or Unoccupied Home Insurance

If you’re living elsewhere during renovations, your insurer may classify your home as vacant after 30–60 days. Standard policies may then deny claims.

A vacant home endorsement covers risks like:

• Fire
• Vandalism
• Theft
• Weather damage

3. Ordinance or Law Coverage

If renovations uncover out-of-code elements (e.g., old plumbing or knob-and-tube wiring), your standard policy may not cover mandatory upgrades. This endorsement helps cover those code compliance costs.

4. Liability Endorsements and Umbrella Insurance

Contractors may be insured, but you still carry residual risk. If someone is injured on your property, you could be sued. Extra liability coverage or an umbrella policy (typically in $1M+ increments) provides added peace of mind.

What About DIY Renovations?

If you’re doing the work yourself or with friends:

• You assume full liability for accidents or defective work
• Standard builder’s risk insurance may not apply
• Verify your homeowners policy still covers damages caused by faulty materials or construction

How Much Should You Insure For After Renovating?

Insurers calculate rebuild value using:

• Local construction costs per square foot
• Material grade and finish level
• Updated systems (e.g., HVAC, electrical, plumbing)
  
  

Example:
Your 1,800 sq. ft. home is insured for $200,000. After a $75,000 kitchen remodel and $25,000 addition, rebuild value jumps to $300,000. You should increase your dwelling coverage accordingly to avoid being underinsured.

How to Reduce Risk During Renovation

Home renovations introduce a variety of new risks—structural, financial, and legal. To protect yourself and your property during construction, it’s essential to go beyond standard insurance coverage and adopt proactive risk management strategies. Here’s how:

Add Riders or Endorsements to Your Insurance Policy

Standard homeowners policies often exclude coverage for damages that occur during construction. To ensure you’re protected, talk to your insurance agent about adding specialized riders or endorsements tailored to renovation risks:

• Temporary Dwelling Under Construction Rider:
  This endorsement provides coverage during construction, especially important for major renovations where parts of your home may be exposed to the elements or incomplete for weeks or months.
  
  
• Theft of Materials Coverage:
  Building materials stored on-site are vulnerable to theft. Whether it’s lumber, plumbing fixtures, or expensive appliances awaiting installation, a rider can help cover the cost of stolen items.
  
  
• Vandalism and Malicious Mischief Endorsement:
  Renovation sites—especially vacant ones—can attract vandals. Additional coverage ensures you're protected if damage occurs due to trespassers or intentional destruction.
  
  
• Fire Risk Coverage:
  According to the National Fire Protection Association (NFPA), fires in structures under renovation are increasingly common. This endorsement helps cover fire-related damages caused by construction activities, faulty wiring, or unattended equipment.

Confirm and Vet Contractor Coverage Thoroughly

Before any work begins, ensure your general contractor and all subcontractors carry adequate insurance. Don’t just take their word—ask for certificates of insurance and verify details:

• General Liability Insurance:
  This covers property damage or bodily injury caused by the contractor's work. Without it, you could be held liable for accidents or damages that occur during construction.
  
  
• Workers’ Compensation Insurance:
  If a worker is injured on your property and the contractor lacks workers' comp, you could be responsible for medical bills or legal claims. This coverage is a must for any hired labor.
  
  
• Subcontractor Coverage:
  Many general contractors hire plumbers, electricians, or carpenters. Confirm that the contractor’s insurance extends to subcontractors—or ensure each subcontractor has their own valid coverage.
  
  
• Written Liability Agreement:
  Request a formal agreement that outlines responsibility for damages, injury claims, and warranty coverage. This document can be critical in the event of disputes.

Secure the Renovation Site

Physical site security is another vital part of risk mitigation:

• Lock up materials and tools at night or when workers aren’t present.
• Use surveillance cameras or motion lights to deter theft and vandalism.
• Post clear signage to warn visitors and neighbors of construction hazards.

If you’re vacating your home during the renovation, make sure it’s regularly checked by a trusted friend, neighbor, or property manager to avoid appearing abandoned—a red flag for theft and vandalism.

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Post-Renovation Insurance Checklist

Once your renovation project is complete, your home is likely more valuable, functional, and possibly more complex than before. But unless your insurance policy is updated to reflect those changes, you could be financially exposed in the event of a loss.

Use this checklist to ensure your coverage is aligned with your upgraded home:

Re-Evaluate Your Dwelling Coverage

Your dwelling coverage should reflect the new rebuild cost of your renovated home. This is especially important if you've:

• Added square footage (e.g., extensions, additional rooms)
• Installed higher-end finishes or fixtures
• Upgraded core systems like HVAC, plumbing, or electrical

Contact your insurance provider to request a revised replacement cost estimate. This ensures your policy will provide sufficient funds to rebuild the home to its post-renovation condition in the event of a disaster.

Adjust Personal Property Limits

Home renovations often include the purchase of:

• New electronics (TVs, sound systems, computers)
• Expensive furniture
• Appliances and home entertainment equipment
• Custom-built features (bookshelves, cabinetry)

These items may not be fully covered under your existing personal property limit. Review your policy to ensure coverage is adequate and that high-value items (like art or antiques) are itemized if necessary.

You may want to consider:

• Scheduled personal property endorsements for specific valuables
  Switching to replacement cost coverage rather than actual cash value to receive full reimbursement without depreciation

Update Liability Limits

Certain renovations can increase your exposure to liability risks, especially if they involve:

• Swimming pools, hot tubs, or saunas
• Outdoor kitchens or fireplaces
• Trampolines or play structures
• Frequent visitors due to home offices or rental spaces

In these cases, it’s a good idea to increase your personal liability limits and consider adding an umbrella policy, which offers additional liability protection—typically in $1 million increments.

This becomes crucial if someone is injured on your property and sues you for medical expenses, lost wages, or damages.

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Ask About Premium Discounts

While some renovations may raise your premiums, others can lead to significant savings. Ask your insurer if your improvements qualify for any of the following discounts:

• New Roof Discount: Installing a new, weather-resistant roof can reduce the risk of leaks, collapse, or wind damage.
• Storm Mitigation Credits: In areas prone to hurricanes or windstorms, features like impact-resistant windows and reinforced doors may qualify.
• Smart Security Systems: Devices like video doorbells, smart locks, and monitored alarms can reduce theft risk and may earn you a discount.
• Energy-Efficient Systems: Upgrades to ENERGY STAR-rated appliances, HVAC systems, or insulation may not only lower your utility bills but also your premium in some cases.

Additionally, bundling your updated homeowners insurance with auto or life insurance could open the door to multi-policy discounts.

Request an Updated Policy Declaration Page

After making changes, ask your insurer to send you a new declarations page, which summarizes your updated coverage, limits, endorsements, and deductibles. Review this carefully and keep a copy for your records.

Document All Improvements

Finally, keep a complete file of:

• Renovation contracts
• Invoices and receipts
• Permits and inspection reports
• Before-and-after photos

This documentation can help during claims, appraisals, or future policy reviews, and serves as proof of the value you’ve added to your property.

Conclusion

Renovating your home is a major investment—one that should be matched with equally robust insurance protection. From increasing rebuild value to managing contractor risk and addressing potential liability, your homeowners policy needs to evolve along with your property.

Before you pick up a hammer or call a contractor:

• Speak to your insurer
• Understand how renovations affect coverage
• Explore endorsements like builder’s risk and vacant home insurance
• Review liability and replacement cost options

When done right, home renovations enhance not just your space—but your peace of mind too.