Insights

Safeguarding Your Remodel: Essential Insurance Coverage

March 29, 2024 by Jeff Hadley

Just like laying a solid foundation is crucial for a successful remodel, having the right insurance safeguards your project from unforeseen events.  Imagine the excitement of transforming your living space, only to have a fire or theft derail your dream.  Peace of mind is paramount during a remodel, and insurance coverage is your security blanket.

Understanding the Different Phases of Coverage:

The insurance needs for your remodel can be categorized into two main phases: during construction and post-construction.

During Construction: Builder's Risk Insurance

Think of builder's risk insurance as a suit of armor for your project.  It protects a wide range of elements from the elements (pun intended!) and other threats:

Property Damage Coverage: 

Fire, theft, and vandalism are just a few of the events covered by builder's risk insurance.  It also shields your project from wind, hail, and lightning damage.  Knowing your project is financially protected from these unforeseen events allows you to focus on the excitement of creating your space.

Coverage Details: 

Builder's risk insurance typically covers the structure itself, any additions being built, and building materials on-site.  However,  it's important to discuss the specifics with your agent.  This might include:

  • Limits of Coverage: Determine the appropriate amount of coverage for the value of your project and materials.

  • Named Perils vs. All-Risk Coverage: Standard policies typically cover named perils (listed events like fire or theft). All-risk coverage offers broader protection but comes at a higher premium. Discuss your risk tolerance with your agent to find the right fit.

  • Site Preparation and Debris Removal: Some policies may include coverage for site preparation and debris removal after a covered event.

Protecting Yourself Further: Contractor Insurance

While builder's risk safeguards your project, another layer of protection comes from ensuring your hired contractors carry adequate insurance:

  • Liability Insurance: Reputable contractors will have general liability insurance. This covers property damage and bodily injury that occurs on the job site due to the negligence of the contractor or their workers. In the unfortunate event of an accident, their insurance, not yours, would be responsible for covering the costs.

  • Worker's Compensation: Worker's compensation insurance protects the contractor's employees in case of work-related injuries or illnesses. This ensures medical bills and lost wages are covered, and the liability doesn't fall on you, the homeowner.

  • Umbrella (Excess Liability): Larger projects or even small projects on expensive homes have potential liabilities much greater than what may be covered under standard GL policies. In this case, a reputable contractor should carry an umbrella policy ($5,000,000 plus), adding further protection in the event of a loss. 

Requesting Proof of Insurance

Don't just take a contractor's word for it.  Always request a certificate of insurance (COI) as proof of their liability and worker's compensation coverage.  Ensure the COI lists you, the homeowner, as an additional insured. It is wise to consult your agent on who should be listed as the contractor’s additional insured.

Once the Project is Complete:  Homeowner's Insurance Updates

Congratulations!  Your remodel is finished, and it's time to celebrate your beautiful new space.  But before you break out the bubbly, ensure your homeowner's insurance reflects the changes:

  • Increased Dwelling Coverage: Renovations often increase your home's value.  A common mistake is overlooking this factor.  Standard homeowner's insurance might not cover the full replacement cost if the value has gone up.  Contact your insurance agent to review your existing policy and adjust dwelling coverage accordingly.

Don't Wait Until the Hammers Start Swinging: Building a Checklist for Peace of Mind

Being proactive is key.  Contact your insurance agent well before construction begins to discuss your specific project and ensure your coverage is adequate. They can guide you through the different options and tailor a plan that provides peace of mind throughout the remodel. The terms within a home improvement contract may contain specific requirements for the owner to provide insurance. This is standard, and it is important to have your agent review this language. 

To ensure you have all your bases covered, consider creating a checklist with your agent.  Here are some key items to include:

  • Builder's Risk Insurance: Discuss the coverage amount and any exclusions that might apply.

  • Increased Dwelling Coverage: Estimate the post-renovation value of your home to determine the appropriate coverage amount.

  • Liability Insurance: Standard homeowner's insurance usually includes liability coverage. However, confirm it extends to potential risks during construction.

Investing in the Right Coverage

A little planning and the right insurance coverage go a long way in ensuring a smooth and stress-free remodel.  By approaching insurance proactively, you can face the inevitable challenges of construction with confidence, knowing your investment is protected.  Now, go forth and create your dream space!

Disclaimer: The information provided here is intended for general informational purposes only. Hadley General Contractors is not an insurance expert or provider and does not assume liability for any actions taken based on the information provided in this blog. While we aim to provide valuable insights and tips for protecting your home remodel project through insurance, the specifics of your insurance needs and coverage should be discussed with a professional insurance agent.

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