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When Remodeling Home....Be Sure to Add Extra Value to Homeowners Insurance.

By
Real Estate Agent with La Rosa Realty

According to a national survey conducted by Trusted Choice®, a group of insurance agencies and financial firms, nearly 40 percent of homeowners who said they had significantly remodeled their homes (such as adding a deck, room, or porch) said they had not updated their homeowner's insurance policies to reflect these changes.

Oftentimes here in Florida, many people learn the hard way, especially during a disaster. If you fail to notify your insurance carrier that you have added a deck, fence, pool or other major improvements, then don't expect these items to be covered during a disaster.

The reason you should notify your insurance company is that remodeling quickly adds to a home's value, but many homeowners fail to increase their insurance coverage to match. Naturally, some might believe that it will cost them more and they don't have the funds. However, if you have already taken time out to invest and improve your property, don't you believe protecting that investment should be a major factor?

Here are some tips to keep in mind:

Basic Insight:

Many homeowners only insure their homes based on their lender's requirements, purchasing only enough insurance to cover their mortgage balance. The result, many homes in the U.S. are under insured.

If you do not have a Homeowners policy that automatically raises your coverage on an annual basis due to increasing home values in your area, you need to make sure you adjust your level of coverage to match your home's value. Naturally, this decision is up to you to make sure you have enough coverage.

Make sure you report any renovations to your insurance company or agent as soon as you begin, or at least right after completion. It's also recommended that you take before and after pictures in case your insurance company requires them.

Some homeowners also take advantage of a multi-policy discount by insuring their home with the same company that insure their vehicle.

Most important, you need to verify that any contractors that are going to work on your home are properly licensed and insured. Ask to see copies of both their licenses and insurance policies. Most important, check references, check Better Business Bureau to see if they're any complaints against them or you can also check county records. Don't just do a search on the name of the business, do a search on the person's name. As we all know, business names can change often.

If you have installed home safety upgrades to your home since you purchased your homeowners' insurance policy, i.e., alarms systems, fire extinguishers, etc. be sure to notify your insurance carrier.

Finally, it is recommended by industry experts that you review your homeowners' insurance policy at least once a year to ensure your policy matches your home's replacement value.

The time to think about these tips is not during any type of disasters but beforehand. No one wants to experience any disasters but everyone needs to be prepared. Is your insurance policy in order?

Comments (2)

Bonnie Erickson
Tangletown Realty - Saint Paul, MN
Netta, This is a helpful reminder.  I seldom think about it because we've been with the same agent for over 30 years and have always carried replacement coverage with the automatic annual increase.  My clients, however, may not have the same kind of insight into the need for insurance to be adjusted periodically.
Nov 27, 2006 07:49 AM
Laura Spears
Olympic Northwest Insurance - Port Orchard, WA
This is a great blog, most people do not realize the need for maintenance on their policies.  Another thing to keep in mind is if you are doing any major remodeling on your home, most preferred companies have an exclusion built-in for any damages caused if they are not made aware of the activity beforehand.  Just something to think about before adding on that extra square footage!  Thanks for the thoughts!
Dec 01, 2006 04:39 AM