Do you have enough homeowners insurance for a home improvement project?
Your house is likely your biggest asset, and it’s wise to periodically examine coverage, to ensure that you’re adequately covered against damage and liability. This is especially important if you’re planning a major project, such as remodeling, rebuilding or building a new house.
Make sure the contractor is insured
Anytime you hire a contractor to work on your home or property, take time to verify that they and any subcontractors are appropriately insured, as well as licensed and bonded. While it’s a good idea to ask for a contractor’s certificates of insurance, an even better practice — because certificates can be faked or altered — is to contact the insurers to confirm coverage. Some experts recommend that contractors carry at least $1 million in coverage for each insurance type.
Meanwhile, highly rated insurance providers tell us that you should consider an extra step: Get yourself named as an “additional insured” on the contractor’s general liability policy. This ensures you’re fully covered against liability for damage that can occur during your project, such as workers breaking a water line that causes a neighbor’s property to flood. Getting yourself added to the policy may cost you little or nothing. Also, it means the insurer will alert you if the contractor’s policy lapses.
Expect your premium to increase after remodeling
It’s important to realize that some home improvements can affect your homeowners insurance premium or coverage. For example, a major kitchen remodel could mean that your home would cost more to replace in case of disaster.
Many policies include a replacement cost endorsement that guarantees sufficient coverage to rebuild your home. Be sure to review your homeowners coverage with your insurance agent to be sure you have replacement coverage, and that the amount is in line with current costs.
Extra coverage needed when building
The typical homeowners insurance policy is not sufficient to cover risks associated with building or rebuilding a home. Top-rated insurance experts recommend that you take out a builder’s risk policy to insure your property and on-site building materials during construction.
For instance, if half of your house was destroyed, a typical homeowner policy will cover the intact half and a builder’s risk policy would cover what’s being rebuilt. Agents will base the builder’s risk policy cost on building plans and estimated construction costs.
If you’re in the market for home-related insurance, be sure to get quotes from several companies that have good ratings from both consumers and from independent rating organizations.
This article was originally published at Angie’s List.