Should I move to a new home or renovate my house?

17 Nov

If you are unhappy with your current home, you may be trying to decide whether to move to a new home or renovate your current house to add exactly what you want. While renovating allows you to add the exact features you want in a house, it can be difficult having to deal with permits, finding a contractor and living in a construction zone. 

However, moving to a new home comes with its own challenges such as getting your home ready to sell, packing up and finding a new home that meets all of your needs. Both options will have an impact on your homeowners insurance premium

Keep reading to look at some specific renovations to see how they can impact your life and your homeowners insurance premium:

Adding square footage to your home

If your current home is simply too small, you may be considering adding square footage to your home. Finishing a basement or adding on an addition can make your home bigger and your life easier. However, adding square footage is often a major upgrade that is not only expensive but can be time consuming. Be sure to consider not only the cost but how long you will be living in a construction zone before starting a major renovation such as this.

When it comes to insurance, adding square footage will almost always push up your premium. Insurers consider the cost to rebuild your home if it is damaged or destroyed by a covered peril and a larger home will be more expensive to rebuild. If you do add square footage to your home be sure to notify your insurer, if you fail to do so you could face a denied claim in the future. 

Renovating a Kitchen

While refacing cabinets or putting up a backsplash are pretty easy upgrades that won’t impact your life or homeowners insurance, a full gut job on the other hand can be very disruptive to your life, living without a kitchen for weeks on end can be frustrating and expensive.

However, a renovated kitchen can absolutely improve your life as well as increase the value of your home. In most cases, you will get the full value of a kitchen reno back if you decide to sell the home. 

A full kitchen renovation will impact your insurance premium as it increases the value of the home as well as the cost to rebuild or repair your home if it is damaged or destroyed. While you don’t need to notify your insurer of a simple backsplash addition, if you end up renovating your entire kitchen, your insurance company will need to be informed. 

Putting in a pool

Adding a pool will certainly up the value of your home as well as your insurance premium. Pools can be a fun upgrade to your home, but they bring a ton of risk with them and insurance companies hate risk. 

Pools are also not a great investment, they rarely add enough value to your home’s price to cover the cost to build it. However, if you are looking to up the quality of family time, a pool can be a great addition.

Always notify your insurer if you add a pool to your home and expect your premium to go up significantly. Your insurance company may require fencing or alarms to be installed to help minimize the risk.

Upgraded wiring

While not the sexist upgrade, this one will not only keep your family safe, but it will also lower your insurance premium. If your home has ancient wiring, upgrading it to code will not only make your home safer, but it will also result in a lower insurance premium. Insurers love any upgrade that lowers the risk of a fire or other peril, and they will lower your premium once the wiring is upgraded. Always notify your insurer if you are upgrading the wiring or other major systems (plumbing or HVAC) and ask your insurance company to rerun your premium. 

Roof replacement

If your roof needs replacement, you could end up saving money on your homeowners insurance. While a new roof will not usually increase the value of your home, it will absolutely make it easier to sell. Potential buyers love new roofs as it puts off a major expense for at least 20 years. 

Insurers also love new roofs as they help protect your home against water damage. If possible, consider impact resistant roofing materials, your insurer will usually offer a discount if you use impact resistance materials, particularly if you live in a storm prone area.


Why does a home remodel impact my home insurance?

A remodel will often increase the value of your home and in some cases, it will increase the risk that your home presents to an insurer. 

If a renovation adds square footage or increases the cost to rebuild your home, your insurance company will need to cover that additional cost by upping your premium. This is due to the fact that they will be on the hook for rebuilding your home if it is destroyed by a covered peril.

Other upgrades, like a pool, increase the chance that someone will be injured at your home so your insurer will increase the cost of your liability insurance in the event someone is injured in your home, and they have to pay out on a claim. A larger risk will almost always result in a higher premium.  

Do I need to notify my insurer about all renovations?

The short answer is no, if the update is purely cosmetic and doesn’t change the value or risk factors of your home, your insurance probably doesn’t need to be notified. As an example, painting a room or even the entire interior of your home doesn’t require a call to your insurer.

If the renovation could possibly change the value of your home or increase any risk factors, you need to notify your insurer. If you fail to do so, your insurer may have grounds to deny a future claim that involves the renovated portions of your home. 

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