Does home insurance cover remodeling?

Key takeaways

• If your home renovation project increases your home's value, you may need more coverage to stay fully protected.
• Inform your insurer about your home renovation project before work starts so you can avoid denied claims and be sure that you have the right protection during the project.

A home renovation is exciting until you realize it can bring risks that might affect your insurance in ways you didn't expect. Upgrading your kitchen, adding a deck, or even hiring a contractor can all have an impact on what your home insurance covers.

The fact is, home improvement projects can introduce new risks, new responsibilities, and the potential for coverage gaps. Before the first hammer swings, it's worth knowing how to protect yourself, your home, and your investment.

Does homeowners insurance cover remodeling?

Yes, but with limitations. Most homeowners insurance policies will cover parts of a renovation, but not automatically and not everything. Coverage depends on the type of home improvement project, who's doing the work, and whether you've updated your insurer about the changes you plan to make.

In general, if you're only doing small DIY home updates, your existing homeowners insurance policy may provide enough coverage as long as the project doesn't significantly change your home's value. More substantial renovations (such as adding square footage, finishing a basement, or installing high-end fixtures that increase your home's value) may mean your current coverage limit is no longer high enough.

Things typically covered by homeowners insurance during a renovation

During a renovation, a standard homeowners insurance policy provides protection for your home in several important ways but with limits, conditions, and exclusions. For example, a basic policy will typically provide coverage for:

• Damage to your home from a covered event. If a fire, windstorm, or another covered event damages your home or the renovation work being done, your homeowners insurance may help pay for the repairs up to the limit in your policy.
• Renovation materials that are stored on your property. Lumber, appliances, flooring, and other materials kept in your garage or yard are often covered if they're stolen or damaged by a covered event. Policies may have lower limits for building materials, so check with your insurance company.
• Personal property inside your home. Your belongings remain covered during the renovation. However, this may be a good time to review your limits, especially if you're storing expensive items or tools on-site.
• Liability protection. If someone is injured on your property during the renovation, your liability coverage generally will apply. This is especially important if friends or family are helping with the home renovation.
• Additional living expenses (ALE). If a covered loss, such as a fire, makes your home temporarily unlivable during the renovation, ALE coverage can help pay for hotel stays or other living costs until you can move back in.

Things not typically covered by home insurance during a renovation

Home renovations can introduce conditions that standard homeowners policies may exclude or restrict. These can include:

• A theft during major renovations. If your home is considered "under construction," many homeowners policies won't cover losses due to theft. That means materials, tools, or new fixtures stolen from the property may not be reimbursed.
• Limited coverage if your home is left empty. Insurers see vacant homes as higher-risk, so if your home sits empty for more than 60 days during the renovation project, your insurance may reduce or remove coverage for things, such as vandalism or other damage.
• Injuries to workers. Your homeowners insurance doesn't cover injuries to contractors or subcontractors. These individuals need to have their own workers' compensation and liability insurance so you're not held responsible if someone gets hurt.
• Costs of the home renovation itself. Your homeowners insurance policy won't cover the cost of the remodel unless the work is damaged by something your policy already covers, such as a fire. It also won't provide coverage for mistakes, poor workmanship, or construction defects.

Does my insurance company need to know about my house renovations?

Yes, it's always in your best interest to tell your insurer about your home renovation project before and after, so they can adjust your coverage accordingly.

Before starting renovation work you should:

• Confirm your contractor's insurance (ask for proof in writing).
• Check your policy's limits for building materials and personal property that is stored on-site.
• Review your liability coverage, especially if workers or subcontractors will be on your property.

Key considerations for your homeowners policy

When it comes to home renovation insurance, the most important thing to understand is that a standard homeowners policy has limits.

Remodeling insurance isn't always a separate policy, but your homeowners policy may need adjustments to better protect your home during and after the project.

Does my homeowners insurance cover contractors?

Your homeowners insurance is designed to protect you, your property, and your liability. It does not protect the people you hire to work on your home. That means contractors and subcontractors are generally not covered under your homeowners insurance policy if they get hurt or cause damage while working on your property.

When you hire a contractor, you'll want them to carry two key types of insurance coverages:

• Liability insurance. This coverage protects you if the contractor accidentally damages your home. For example, if they break a window or start a small fire, their insurance—not yours—should pay for the repairs.
• Workers' compensation insurance. This covers the contractor's medical bills and lost wages if they get injured on the job. Without it, the injured worker could try to hold you financially responsible.

Remember that before any work begins, always ask for proof of insurance from your contractors. A reputable professional should gladly provide it to you in writing.

Coverage for DIY remodeling projects

If you're handling the work yourself, your home remodeling insurance protection may be more limited than you think. Small DIY projects may still fall under your existing homeowners policy, but that doesn't mean every loss or mistake will be covered.

In general, homeowners insurance may help if a covered peril (such as fire or wind) damages your home or materials during a DIY project. But it usually won't cover damage caused by your own mistakes, faulty installation, or defective work. For example, if you install flooring incorrectly or accidentally cause a plumbing leak because of improper work, your policy likely won't pay to redo the project.

There are a few other important things to keep in mind with DIY renovations:

• Your own injuries aren't covered by homeowners insurance. If you get hurt while doing the work, you would need to rely on your health insurance, not your home policy.
• Materials may be covered but limits apply. Supplies stored at your home may be protected if they're damaged by a covered event, subject to your deductible and policy limits.
• Liability risks can increase if others help. If a friend or neighbor is injured while helping with your project, your personal liability coverage may come into play.
• Major DIY renovations can still affect your coverage needs. If the project adds value, square footage, or new features, your insurer may need to adjust your policy.

If you're taking on a larger project yourself, it's smart to check with your insurer before you start. That way, your renovation insurance keeps pace with the changes you're making.

How does a renovation impact my homeowners policy?

A renovation can impact your homeowners policy by changing your home's replacement cost, risk level, liability exposure, and coverage needs. Some home improvements make your home safer and may qualify you for lower rates. Others increase the cost to rebuild your home or add new risks, which can raise your premium or require additional coverage. That's why it's important to think of home renovation insurance as more than just protection during construction. It's also about making sure your policy matches your home after the work is complete.

Your insurer may review changes such as:

• Increased square footage
• Upgraded kitchens or bathrooms
• New decks, pools, or outdoor structures
• Improved roofing, plumbing, or electrical systems
• Added home office or business use
• Higher-end materials or custom finishes

Renovations that can lower your homeowners insurance rate

Certain home renovation projects can reduce your risk or make your home more resistant to damage. These upgrades make your home safer and less risky to insure, which is why insurers may offer discounts which insurers often reward with lower premiums. These renovations may include:

• Roof upgrades. A new, stronger, or impact-resistant roof can lower the chance of leaks or storm damage, which may reduce what you pay for homeowners insurance.
• Updates to old electrical or plumbing systems. Modern wiring and plumbing lower the risk of fires and water damage, two of the most common (and costly) claims.
• Security systems. Burglar alarms, cameras, and monitored systems can reduce the likelihood of theft or vandalism.
• Replacing doors or windows with stronger, safer options. Impact-resistant windows or reinforced doors can make your home more secure and better protected from storms.
• Adding new safety features. Things such as smoke detectors, fire sprinklers, or smart leak-detection systems can help prevent or limit damage.

Renovations that can increase your homeowners insurance rate

Some projects can raise your home's value or add new risks, which means your insurer may need to increase your coverage. Keep in mind that these projects don't necessarily hurt you; they make your home more valuable or riskier, so your insurance needs to adjust so that you have the coverage you need. These renovations may include:

• Adding square footage. More space means a higher cost to rebuild in the event of a covered loss. That often results in higher premiums to properly insure your home.
• Major kitchen or bathroom remodels. High-end finishes, custom cabinetry, and upgraded appliances all increase your home's value, which can require you to carry more coverage.
• Adding a pool or hot tub. These additions can increase the chance of injuries and liability claims and as a result, can increase your homeowners insurance rates.
• Building a deck or outdoor living space. More structures, including those outdoors, means more to insure and can add an additional liability risk.
• Adding luxury features. Things like high-end flooring, granite countertops, built-ins, or expensive fixtures raise the cost to repair or replace your home after a loss.
• The addition of a designated home office or business space. These types of changes alter how your home is used and may require you to carry additional coverage.

What policy changes should you make?

The right home remodeling insurance updates will depend on the size of the project, whether you're hiring contractors, and how much the renovation changes your home's value or risk profile.

The most common policy changes to consider:

• Increase your dwelling coverage. If your renovation raises the cost to rebuild your home, you may need a higher dwelling limit.
• Review personal property limits. If you're buying new appliances, furniture, built-ins, or high-value finishes, make sure your contents coverage is still adequate.
• Consider ordinance or law coverage. If your renovation or a future loss could trigger building code upgrades, this coverage can help pay the extra cost to bring your home up to code.
• Ask about vacancy coverage. If you'll be living elsewhere during the remodel, you may need added protection for a temporarily unoccupied home.
• Review liability coverage. Projects that add a deck, pool, or other features may increase the chance of injuries and lawsuits.
• Look into umbrella insurance. If your renovation significantly raises your liability exposure, an umbrella policy may provide added protection.
• Update other structures coverage. If you're adding a detached garage, shed, fence, or outdoor living area, make sure those structures are properly insured.
• Check for home business needs. If you're adding a dedicated office or workspace, your insurer may recommend additional coverage.

Homeowners Insurance with Liberty Mutual

Get a quote for homeowners insurance online at Liberty Mutual or call for your homeowners insurance quote, so our representatives can walk you through the process: 800-295-1722.