Many Americans spend months indoors. Some are spending their money and time to change the scenery or improve their surroundings. People are taking on more renovation projects and office equipment is being purchased at an increasing rate.
You may be underinsured if you have expensive items or make significant home improvements. It’s a smart idea to review your homeowners and renters policies if you are considering major home improvements. Here are some ways to make sure it covers your new additions.
Inform your insurance company about your plans
Don Griffin, vice-president of personal lines at American Property Casualty Insurance Association, says there’s a good possibility you are underinsured. Before you make any major purchases or modifications to your home, talk to your insurance company to discuss your plans. They can also clarify the limits and coverages of your current policy. Griffin said that even though some insurers will cover the cost of rebuilding your home if it costs more than it is to repair, it’s not a typical policy and may not cover all your needs. He also recommends once a year reviewing what your home insurance policy covers.
You may have to switch carriers in some instances to obtain the coverage you need. Frank Jones, an independent agent who is also a partner at Mints Insurance Agency, Millville, New Jersey has seen clients change insurers when an additional was not covered. He says, “It is in your best interests to have these discussions now rather than having a claim denied.”
You could be charged more for a new computer and desk, as well as the monitor and chair that you have in your home office. This could increase your personal property coverage.
Renters insurance policies cover your stuff, but they have limits too. Check with your insurance company to ensure you have sufficient coverage if you have office equipment or new electronics.
Take inventory of all your properties
Keep track of everything you buy to help you determine if your policy limits have been exceeded. Griffin suggests that you take an inventory of all your belongings each year. A written inventory is the best, but a simple video tour of your home with your smartphone will do.
Griffin said that losing a home can be a difficult time. Griffin says that when it comes time to file a claim, you don’t always recall what you have. An inventory will help you remember what you had before the disaster.
Make sure you have enough coverage
Structural changes, such as a full kitchen replacement or adding an in-ground pool, will have the greatest impact on your homeowners insurance. Griffin states that even something as simple and straightforward as adding a fence to your house can affect its value. Griffin also suggests that dwelling coverage should be increased if your home is valued higher. Griffin says that if your policy isn’t sufficient to cover the rebuilding costs in the event you have to file a claim, it won’t matter what insurance policy you have.
Jones advises that you pay more attention to the cost of rebuilding your home than to the amount you have spent on it when adding coverage. He explains that these are two distinct numbers. “If you add $20,000, your insurance company will look at the cost of rebuilding the addition. You might not get it back.”
Avoid these pitfalls
On top of ensuring coverage, a proactive conversation with your agent could help you avoid potential renovation pitfalls. He or she might recommend building ordinance coverage, which will protect you against having to pay extra for expenses to keep your home in compliance with local laws.
If you have large renovations to do yourself, it is a good idea to hire a licensed contractor. They will carry builders risk coverage to protect your expensive materials from theft and damage. A building trade association can help you find one.
If you are doing home renovations, make sure to take lots of photos. Take pictures before, during, and after. If you need to file a claim or redo the work, these photos could be very useful.
