Renovating a property is exciting, but it is also one of the easiest ways to accidentally create insurance gaps. Many homeowners and small property owners assume their coverage stays the same once a project starts. That assumption is where costly mistakes begin.
Whether you’re planning your dream remodel or a simple update, protecting your investment with the right property insurance coverage is essential. Understanding how insurance works during renovations can save you from denied claims, delays, and unexpected out-of-pocket expenses. Working with an experienced agency like Farmer Brown Insurance from the start helps ensure your project is protected before the first wall comes down.
Why Home Insurance Changes During Renovations
Property insurance during renovations is not as straightforward as many people believe. Renovation work increases risk for the structure itself and for anyone working on or around the property. Once construction starts, insurers may see the property as higher risk due to exposed structures, open walls, tools on site, and increased foot traffic.
If your policy is not updated, you may find that certain incidents are no longer fully covered. This is especially true for larger projects or longer timelines, which can result in higher premiums or coverage limitations. Your insurance costs may increase depending on the scope and duration of the work.
Understanding Your Existing Coverage Before Starting Work
Standard homeowners insurance is designed to protect a finished, occupied home. In most cases, it covers risks such as fire, theft, weather damage, and certain liability claims. However, homeowners insurance coverage may exclude or limit protection during renovations, especially for construction-related incidents.
Many people misunderstand their protection during this phase. Gaps often include damage caused by contractors, theft of materials from an open job site, and structural damage during construction. Reviewing your existing coverage before any renovation begins helps you identify these gaps early and avoid unexpected out-of-pocket costs.
Types of Renovations That Affect Insurance
Not all renovations impact your insurance coverage in the same way. Projects that increase your
home’s value, like adding a family room, finishing a basement, or upgrading to high-end finishes, often require policy adjustments. A kitchen remodel with new appliances and custom cabinetry can significantly raise your home’s replacement cost, meaning your dwelling coverage may no longer be sufficient.
Similarly, adding square footage with a new addition or converting an attic can affect both your coverage limits and your premiums. Keeping your insurance agent informed about major changes ensures your policy reflects the true value of your improved property.
Builder’s Risk Insurance and When You Need It
Builder’s risk insurance is a specialized type of coverage designed for properties under construction or renovation. Unlike a standard homeowners policy, builder’s risk addresses the unique risks associated with remodeling. It protects the structure and building materials against fire, theft, storm damage, and vandalism.
This type of policy is commonly used during major renovations and can protect both property owners and contractors depending on how it is structured. Agencies specializing in contractor and construction insurance, like Farmer Brown Insurance, can help determine whether builder’s risk coverage makes sense for your specific project.
Protecting Building Materials and Construction Materials On Site
During a renovation, building materials and construction materials are often stored on site before installation. Many standard policies limit or exclude coverage for these items. If materials are stolen, damaged by weather, or vandalized, replacement costs can add up quickly. Without proper coverage, homeowners may have to pay these costs out of pocket, significantly impacting renovation budgets. Ensuring materials are covered while on site is an important detail that often gets overlooked.
Liability Exposure Increases During Construction
A home improvement project does not just affect the building. It also affects liability. Contractors,
visitors, and even neighbors can be exposed to risks during construction. Slip-and-fall accidents, falling debris, or damage to neighboring properties can all become liability issues if coverage is insufficient.
Before hiring a contractor, verify that they carry both liability and workers’ compensation
insurance. If your contractor cannot provide proof of insurance, find another one who can. You
should also confirm that your own policy provides sufficient protection against injuries or
damages involving third parties on your property.
Home Renovation Insurance as an Add-On to Your Policy
Home renovation insurance is not always a separate policy. In many cases, it works as an add on to your existing homeowners coverage, allowing you to extend protection for the duration of your project without purchasing an entirely new policy. These endorsements or riders can cover gaps related to construction activity, temporary vacancy, and increased liability. Discussing add on options with your insurer before work begins ensures you have the right protection in place. Failing to adjust your policy after renovations can leave you underinsured if a disaster occurs.
DIY Job Risks and Insurance Considerations
Taking on a DIY job can save money on labor costs, but it also introduces insurance considerations many homeowners overlook. If you or family members are injured while doing renovation work, your standard policy may not cover medical expenses the same way it would for a licensed contractor. Additionally, damage caused by improper DIY work may not be covered if the insurer determines the work was done incorrectly. Insurance policies generally exclude issues caused by poor workmanship. Understanding these limitations before picking up a hammer helps you make informed decisions about which projects to tackle yourself. Keep a visual record of your renovation process by taking photos before, during, and after the work. Documentation such as contracts and receipts is important for insurance purposes and
can help support any claims that may arise.
How Home Renovation Affects Dwelling Coverage
Major renovations such as adding square footage, remodeling a kitchen, or building an addition can significantly increase your home’s value. Your dwelling coverage is the portion of your policy that covers the cost to rebuild your home if it is damaged or destroyed. After a major home renovation, your insurance provider may require you to update your policy to reflect the new value of your property. Once renovations are complete, notifying your insurer ensures both your home’s market value and replacement cost are accurately reflected.
Getting the Right Coverage Before Work Begins
Before starting major renovations, review your coverage with an insurance professional who understands renovation-related risks. The goal is not more insurance, but the right insurance for the situation. Farmer Brown Insurance helps homeowners and property owners compare coverage options, identify gaps, and ensure renovation projects are properly protected from start to finish. Taking the time to address coverage before construction begins prevents surprises and keeps your investment secure throughout the entire project.