Hello Lykkers! Home renovations are exciting — a fresh kitchen, a new bathroom, or even a full home extension can transform your living space and increase your property's value.

But here's something many homeowners overlook: renovations can significantly impact your home insurance policy.

Failing to update your insurance after making improvements could leave you underinsured or paying unnecessary premiums. Let's explore how renovations affect insurance and what you should know.

Home insurance policies are based on the replacement cost of your property — the amount it would take to rebuild your home if it were damaged or destroyed. When you renovate, your property's value changes, often increasing replacement costs. This can impact:

- Coverage limits: Your policy may no longer cover the full value of your upgraded home.

- Premiums: Higher coverage limits can lead to increased insurance premiums.

- Liability exposure: Renovations like decks, pools, or extensions may increase liability risks, requiring adjustments to your policy.

- Fact: According to the Insurance Information Institute (III), failing to update your insurance after major renovations is one of the most common reasons claims are denied.

Renovations That Usually Require Policy Updates

1. Additions and Extensions

Building a new room or expanding your home increases the replacement cost. Even a small addition can make your current policy insufficient.

2. Kitchen or Bathroom Upgrades

High-end appliances, luxury countertops, or designer fixtures increase home value. Some policies may not automatically cover premium materials, so you may need to notify your insurer.

3. Basement Finishing or Attic Conversions

Turning unused spaces into living areas raises both property value and potential risks, like water damage or fire hazards, which could affect premiums.

4. Swimming Pools or Hot Tubs

Pools increase liability risk. Homeowners' insurance may require an additional rider or higher liability limits to cover potential accidents.

5. Home Office or Studio Spaces

Adding office equipment, computers, or high-value electronics may require additional coverage, especially if you conduct business from home.

Steps to Take After Renovations

Homeowners often overlook insurance updates after renovations. Ensuring your coverage matches your home's current value can prevent costly gaps." — Jane Smith, Certified Insurance Advisor.

1. Notify Your Insurance Company

Always inform your insurer before starting major renovations. They can advise whether your current policy is adequate or if adjustments are needed.

2. Get Professional Valuations

Hiring an appraiser to determine your home's post-renovation value ensures your coverage matches replacement costs.

3. Review Liability Coverage

For renovations that add risks (pools, decks, heavy machinery), check if your liability limits are sufficient. You may need to increase them.

4. Consider Additional Riders

Some high-value upgrades, like custom flooring or appliances, may require endorsements or riders for full coverage.

5. Update Inventory

Document all changes and keep receipts. A detailed inventory helps streamline claims if damage occurs.

Facts That Homeowners Should Know

- Fact 1: On average, a kitchen renovation can increase your home's value by 5–15%, which may directly impact your coverage needs.

- Fact 2: According to the National Association of Insurance Commissioners (NAIC), 1 in 5 homeowners fails to update insurance after renovations, leaving them underinsured.

- Fact 3: Even cosmetic upgrades like hardwood flooring or built-in appliances can affect replacement costs and coverage requirements.

Final Thoughts

Renovating your home is an investment in comfort, aesthetics, and property value. But Lykkers, don't let excitement blind you to insurance implications. Updating your policy ensures your home and your finances are fully protected.

A quick conversation with your insurance provider before or immediately after renovations can save you from costly gaps in coverage.

Remember: renovations increase your home's value, but without updating your insurance, that value could be at risk.