Taking a few simple steps with insurance when you are making improvements to your home or remodeling can save you from worry and liability as well as save you money. How to prepare for a project depends on a number of different factors, but the first step is always to check with your own insurance agent and your current homeowners’ insurance policy.
More than 65% of homeowners choose to hire a contractor and will do little or no work themselves, according to a survey by www.remodelormove.com. If this is true for you, before hiring a contractor, make sure they have the appropriate insurance, which is typically commercial general liability coverage. “An important step for homeowners is to get a copy of the contractor’s certificate of liability insurance and provide that to their own insurance agent so an expert can ensure it is appropriate for the work. Also homeowners should request that their names be added as an additional named insured on the contractor’s policy.” recommends Adam Friedenbacher, an agency producer at Dennis Collins Insurance.
If your project has a big scope such as building a new home, then a course of construction policy may be the right choice. This insurance can cover items unique to a large construction project such as materials and expenses incurred because of delay in the project. However, these policies are typically not available for homeowners who are acting as their own general contractors.
For homeowners that choose to hire different subcontractors or laborers directly for projects, if the subcontractor has insurance, a homeowner should require that they be added as an additional named insured on the policy. If a homeowner hires an individual to help with only some of the work, homeowners should ask their insurance agent if the worker is covered under their homeowners insurance. They are often covered unless they are working frequently at your home. If this is the case, then consider adding out-servant coverage to your policy, which provides coverage for workers who work longer terms in your home.
“In general, consumers should understand that any worker’s compensation benefits available via their homeowners policy is designed to provide coverage for incidental workers – i.e., gardeners, pool cleaners, etc.” explains Jeff Paggi, Director of Personal Lines Product Management for Farmers Insurance. “ Since a typical remodeling project will involve more than this type of occasional and incidental work, homeowners should ensure that their contractor is insured for these types of circumstances.”
Also consider increasing the amount of liability insurance you carry during a remodel project since this is a “higher risk” period. Homeowners can either increase the liability amount in the existing homeowners policy or add an umbrella liability policy for the duration of the project for more piece of mind.
“As you plan your next home remodel, make sure to review the latest building codes as new safety features may exist along with some of the updates may help you qualify for cost savings on your homeowner insurance. A new roof, updated electrical systems and other improvements can make your home safer and therefore reduce the price of your homeowner insurance. When you finish the remodel, discuss the updates with your insurance company to ensure you are adequately protecting one of your largest assets” says Brad Lemons, Vice President of Property Product Management at Nationwide Insurance.
A helpful resource to estimate the cost of both your remodel project and the potential increase in your home value are the free-to-use cost calculators at www.remodelormove.com. They can help you anticipate how much additional insurance coverage you may need before and after completion.