Sometimes making additions and/or improvements to a home will increase its value, sometimes they won’t. Either way, making additions and improvements certainly increase the value of the home to the person making them. A common mistake among homeowners looking to do some work on their homes is assuming that their existing homeowners insurance policy will cover any improvements or additions. It’s not a difficult mistake to make – after all, the improvement is part of the home, and the homeowners insurance policy covers the home, so therefore it should also cover the improvement. Unfortunately, this isn’t always the case.
Before you begin any project, you should check with your homeowners insurance company. It’s likely you’ll need to update your home insurance policy to reflect any changes you’re planning on making and to find out if you need financial protection during the process of making those changes. If you don’t get coverage, and the project is damaged for one reason or another, you may find that you’re not covered and stuck coming out-of-pocket for any repairs, or just to get your home back to the way it was. It’s also possible to get dropped from your homeowners insurance company if the changes you make are large enough, and you don’t first update your policy to reflect the changes.
Even if the changes you’re making are purely cosmetic, such as hardwood or tile flooring, you’ll still want to check with your insurance company. If the upgrade to your home is particularly valuable, such as very expensive wood or tiles, you might want to purchase extra protection in the form of an insurance rider. These are policies designed to grant extra coverage for one thing, and people often buy them to protect valuable items like jewelry, works of art, or other pieces of furniture.
Last but not least, if you’re using contractors or subcontractors to do the improvements, make sure they all have their proper licensing and insurance up-to-date, and don’t be afraid to verify. If you use someone without insurance to make improvements on your home and something goes wrong, you could end up getting sued.