Home remodeling is often an overwhelming experience with high stakes for you. There’s creating the overall vision from the project, gauging its financial feasibility, finding a reliable contractor, and wishing for an easy construction process. But an important consideration that usually falls by the wayside is making sure the project is sufficiently insured.
Whatever a home remodel entails, it’s important that all the players involved are insured-from the homeowner, to the general contractor, to any subcontractors involved, says Mark Komiskey, Director of Homeowners Products at Esurance. He recently shared insurance tips that we would like pass on to our clients to keep them financially sound while they think about remodeling a home.
Insurance Tips for Home remodeling Projects
1. Notify the insurance company prior to the remodeling.
Home remodels, large or small, typically increase the value of the property and the risk borne by it-and the homeowners insurance policy should reflect this. If you fail to notify the insurer and don’t reconsider coverage offerings for the home, you might be surprised by more than the “big reveal.”
Once the project’s completed, homeowners need to ensure that their policy aligns with the home’s new replacement value. It is best to also take into account any new items purchased for the renovation, like appliances or furniture.
Moreover, it’ll likely be required to raise the liability coverage limit for the duration of the project. If, as an example, a neighbor is injured on the worksite, the homeowner could possibly be confronted with unforeseen legal and medical fees.
2. Confirm the general contractor is licensed and bonded.
Before you greenlight a project, we advise hat you check that the general contractor is licensed and carries a surety bond. In the event the contractor doesn’t complete the project per the contracted agreement, the surety bond could cover the financial losses incurred because of this. The agreement should also mandate the compliance of building codes and proper permits.
Additionally, it’s critical that a contractor carries workers’ compensation and liability insurance, and that you need to ask to see both certificates. The contractor really should be accountable for not simply property damage, but additionally negligent workmanship and injuries sustained on the job.
Like every insurance policy, a general contractor’s coverage has limits, and, therefore, shouldn’t preclude raising the limits on a homeowners policy.
3. Confirm coverage for any subcontracted workers.
For many home renovations, general contractors will subcontract builders, electricians and plumbers. Because these employees don’t work for the contractor full-time, they’re typically not a part of their workers’ compensation policy. Similar to a contractor, a homeowner should verify that subcontractors have liability insurance.
4. Consider purchasing builder’s risk insurance.
Building materials and equipment belonging to the contractor or subcontractors aren’t protected by homeowners insurance.
A builder’s risk insurance policy, however, extends coverage to equipment or building materials which have yet to be installed or transported to the work area on the property. It’s quite normal for thieves to target construction sites, especially when there are valuable materials, like copper plumbing pipe. In addition, builder’s risk coverage offers financial protection to the part of property undergoing construction.
5. Confirm the contractor has completed operations insurance.
Completed operations insurance offers a safety net for issues that go awry once the project is considered complete. Say you had an overhead door installed, and one day the door malfunctions and closes on top of your car. If carried by the contractor, completed operations insurance could help pay to repair or replace damaged property resulting from faulty work.
Home improvement projects invoke numerous insurance concerns, but keeping the homeowners insurance company in the loop-and being proactive from start to finish-can do much to close coverage gaps and turn your long-coveted dream home into a reality.