The current housing landscape has seen many homeowners opting to remodel their current homes to accommodate their changing home life needs. With many prospective buyers frustrated by the lack of housing inventory, remodeling has been on the rise. With this said, this will also only increase their chances of a quick sale at the appropriate time. What many homeowners don’t realize prior to embarking on these projects is that they will also need to update their insurance as well. This should always be taken into consideration prior to starting any major project.
What to expect
As expected, remodeling can lead to higher insurance rates, since a home remodel often increases the rebuild cost of a home. Therefore, your dwelling coverage limit should match the rebuild cost of your home. According to QuoteWizard.com, you can expect to pay about an extra $36 for every additional $10,000 of added rebuild cost after a remodel. Below is an approximate breakdown by project of what you could expect:
- $15,000 bathroom renovation = an increase of $54 in insurance premium
- $50,000 kitchen renovation = an increase of $180 in insurance premium
- $48,000 home addition of approximately 400 square feet = an increase of $173 in insurance premium
If budget is a concern, homeowners may want to talk to insurers prior to embarking on any major renovations. This way they may be prepared for increases in insurance premiums. Property damage comprises more than 98% of all homeowner insurance claims. Of property claims, wind, hail, fire and lightning are the most common reported damages. If you are going to invest a lot of money in renovating your home, you do not want to be under-insured. Lastly, although you can never expect to recoup every dollar spent on a renovation at resale, updated homes most certainly sell significantly faster than dated homes.