Why should I report home renovations to my independent insurance agent?

It is essential that homeowners contact their insurance agent when there are plans to start a home renovation project. Whether the project is complex and involves adding extra square footage to a home or it is a simple room makeover, the insurance company needs to be informed.

The insurance company that is the provider of an individual’s homeowners insurance policy must be informed in order to adjust the policy. Adjustments need to be made when square footage is added, appliance/fixture upgrades occur, or a room undergoes considerable changes. Reporting these adjustments or changes to an insurance company may increase a current insurance premium, but the alternative is much worse – not having proper coverage.

After a home renovation project, if the homeowner has not made the proper adjustments to an existing homeowners insurance policy, the new upgrades and/or changes to the home or a specific room might not be covered. This means homeowners may not receive financial compensation or coverage if property in that area is damaged or requires a repair.

In some cases, if adjustments have not been made to the homeowners insurance policy, the room/space may still be covered. Unfortunately, the coverage that is provided will be based on what the insurance company has on file and may not adequately cover the cost of repairs.

Another reason homeowners should contact their insurance agent regarding home renovations is to make sure they are properly protected against any accidents or injuries that may happen during a project. Most contractors have general liability insurance policies, but those do not always provide the protection a homeowner wants/needs. Purchasing an additional general liability insurance policy can provide homeowners with protection against lawsuits that may arise if a contractor is injured while working on a project.

Don’t find yourself in a situation where you do not have adequate insurance coverage during and after a home renovation project. Work with an independent agency to find and compare insurance quotes online. It will help ensure that your home has the proper coverage for both during and after any home renovation project.

How to Keep Your Mortgage-Free Insurance Discount

Mortgage FreeIf you’ve been paying attention, you’re probably already aware that if you’ve worked hard and have paid off your mortgage debt, you could stand to see significantly discounted homeowners quotes from various insurers. But losing that discount could be as easy as applying for a home equity line of credit.

The reasons are simple. Getting a line of credit that’s secured against your house is pretty much the same as having a mortgage, especially in the eyes of homeowners insurance providers. Essentially, it’s a lien against your home—something that doesn’t usually drive up insurance costs, but could cause you to lose certain discounts like mortgage-free rates.

So what approach should you take if you’ve paid off your home, take advantage of the mortgage-free discount, but need a loan to pay for a home renovation project? Here are a couple of options.

  • Find house insurance elsewhere: This is certainly always an option. But while taking your business to another insurance company might send your previous insurer a message, you’re not likely to have any better luck with another company. Insurers typically structure their discounts in the same way, and the bottom line is that by using your house as collateral for a loan, you’re setting yourself up to pay higher insurance rates.
  • Apply for an unsecured loan: By applying for an unsecured loan to pay for your renovation project, you won’t be placing a lien against your home, and therefore won’t lose your mortgage-free insurance discount. But whether or not you’re saving money depends on the insurance rate that you’re able to secure on the loan versus the amount of the discount you’re getting on your home insurance.

There are a good number of variables that go into how much money you pay for your home insurance. In order to be certain that you’re never paying too much for it, shop around regularly and compare homeowners quotes from various insurance providers.