As many Americans face months stuck indoors, some are using their time to upgrade their surroundings. Office equipment purchases are on the rise, and people are tackling renovation projects.
Significant home improvements can leave you underinsured. If you’re considering making changes to your home — or if you already have — it’s smart to revisit your homeowners or renters policy.
TELL YOUR INSURER ABOUT YOUR PLANS: There’s a good chance you’re underinsured before you even make changes, according to Don Griffin, vice president of personal lines at American Property Casualty Insurance Association. Talk to your insurer before making any expensive purchases or changes to your home to inform the company of your plans and clarify your policy’s current coverages and limits. If your home costs more to replace after you’ve improved it, some insurers will pay the new expense to rebuild, but “that’s not every policy, and it may not cover everything you need,” Griffin says. He also recommends once a year reviewing what your home insurance policy covers.
In some cases, you may need to change carriers to get the coverage you need. Frank Jones, an independent agent and partner at Mints Insurance Agency in Millville, N.J., has seen clients switch insurers because an addition wasn’t covered. Renters insurance policies cover your stuff, but they have limits too. If you have new electronics or office equipment, check with your insurer to make sure you have enough coverage for them.
MAKE AN INVENTORY OF YOUR PROPERTY: To help you know if you’ve exceeded your policy limits, keep records of what you buy. In fact, Griffin recommends taking inventory of your belongings every year — a written inventory is best, but even a simple smartphone video tour of your home will suffice.
ADD SUFFICIENT COVERAGE: Structural changes, such as a full kitchen replacement or adding an in-ground pool, will have the greatest impact on your homeowners insurance. But even something as simple as adding a fence can change the value of your house, and if your home’s value increases, so should its dwelling coverage, Griffin says. Otherwise, in the event of a claim, your insurance policy won’t be enough to rebuild, according to Griffin.
When adding coverage, pay attention to how much it would cost to rebuild your home, not how much you spent to upgrade the house, according to Jones.
AVOID PITFALLS: On top of ensuring coverage, a proactive conversation with your agent could help you avoid potential renovation pitfalls. For example, he or she may advise adding building ordinance coverage to protect you from having to pay out of pocket for any expenses that keep your home compliant with local laws and regulations.