Is Your Project Covered by Your Homeowners Insurance?
Your home is one of the biggest investments you have. So it only makes sense you want to constantly improve it. Who knows? Maybe you can even refinance and lower your mortgage payments afterwards. But while you’re thinking about home values and mortgage payments, make sure you know how your improvements will affect your homeowners insurance.
Finishing the basement, adding an attic bedroom, or expanding your family room all add more livable space to your house. Most of the time the addition adds value to your home, so it’s worth it even if you have to take out a home equity line of credit (HELOC) to make it happen. But don’t forget to let your homeowners insurance company know exactly what you plan to do before you even start. That way you’ll be able to get coverage even if something happens before you finish. After you’re finished, your monthly premium might go up, but that means your extra living space is protected if anything happens.
You see a summer full of marco polo with the kids, poolside drinks with the neighbors, and relaxing floats by yourself. Your insurance company sees the risk of drowning, slipping on a wet deck, and neighborhood kids using it without permission. Yeah, the insurance company is kind of a downer. But that’s their job. And that’s why they’re likely to raise your insurance premiums if you have a pool.
That’s not even the worst part. A pool isn’t a guarantee that you’ll add value to your home. A lot of people avoid having a pool because of the safety concerns, the additional insurance costs, and the cost of upkeep. So when you go to sell, buyers might ask you to pay to fill it in or worse--avoid your house all together.
Plumbing, heating, electric, roof
Newer is better--or at least safer as far as your homeowners insurance is concerned.
But when you try to DIY those systems, you might be out of luck if something goes wrong. Most insurance companies will want to see that a licensed contractor made the improvements. It’s easy for an amateur to make a mistake. And that could mean an electrical fire, burst pipes, or shingles flying off the roof.
Notice a trend? If you’re making any improvement, make sure you use a licensed contractor and do everything up to code.