How Do Home Renovations Impact Your Insurance?

According to Zillow, home values are rising in most places around the US, including NJ homes that show an 18.1% jump over 2020. As a decades-long premier provider of NJ Home Insurance, carefully tracking home prices and related metrics are essential to helping our clients insure their homes properly. Staying on top of trends is crucial data to advise our clients on protecting their most valuable asset.

At the Dickstein Associates Agency, we use reports like this that detail the impact of home renovations to share helpful insights and data with our clients. While rising prices are great for increasing your equity and net worth, the change in value can affect your insurance coverage. For example, if you have been in your home for a few years or longer, you have likely seen substantial growth in your home’s value. As such, it’s imperative to keep your homeowners insurance coverage limits updated to match the increase in home values.

An annual review with your agent will help to make sure your coverage is keeping pace with your real estate properties. We use the assessment to determine if rising home values or any upgrades, additions, or alterations to your home are reflected in your insurance coverage. These changes can impact your property value and skew the limits of the RCV (Replacement Cost Value) portion of your homeowners policy. A policy with the RCV feature is a key part of protecting your real estate assets.

This report discusses specific home improvements and their impact on all aspects of your homeowners insurance. The following items are those most often included when homeowners renovate their properties.

Kitchen and Bath Renovations

Studies consistently show updating a kitchen or bathroom generates the highest return on investment by as much as 50% or greater. Updates that swap standard grade material such as Corian to granite countertops will impact Replacement Cost Value. While such upgrades usually increase premiums, upgrading plumbing and electrical systems may help to lower them. Your homeowners insurance policy needs to properly adjust to meet the needs and affect your premium either higher or lower.

Roof Repair or Replacement

Homes are built to last, but roofs have a shelf life of about 20 years. The older your roof, the more you are likely to pay higher premiums to insure replacing it. Conversely, you may be eligible for a lower premium if you have recently replaced or made significant repairs to your roof.

Home Offices

The pandemic dramatically increased the numbers in the work from home model. Adding a home office may also increase your home’s insurable values. It might also be the cause to add endorsements to your existing homeowners policy or a new, specialized coverage for unique situations to protect expensive equipment or inventory. For example, suppose your business brings foot traffic to your home. In that case, you may require an endorsement to your existing homeowners policy or a separate business policy to provide property and liability coverages.

Room Addition or Internal and External Expansion

Adding a room is a considerable expense that always increases home value. Or you may turn unused space in the attic or basement into livable space for a bedroom, home theater, or office. Regardless, changes to your residence that add usable square footage, whether indoors or outdoors, will require policy changes with your coverage. For example, an attached deck, or freestanding shed, or a workshop are reasons to update your policy limits and property description to reflect how they affect the value of your home.

Swimming Pool

Usually, building a swimming pool will increase your home value and make it more attractive to future buyers. It’s important to know that insurance companies view pools as presenting a new liability risk, which may cause a premium increase and safety recommendations.  Consider higher liability limits and adding an umbrella policy if not already in place. Insurers may also require additional safety precautions, such as a locked fence or pool cover. Fun features like diving boards and slides also present a more significant potential peril that can affect limits and in some cases coverage availability.

Talk to Us

The above scenarios are among the most typical changes homeowners make to their residences, and many more unique situations can also affect your coverage and insurance rates. As your local, independent NJ Home Insurance specialists, we are here to help you get comprehensive coverage at competitive rates. So, whether your plans are for upgrades, additions, alterations, or renovations, we are here to make sure your homeowners insurance has the correct amount of insurance, including the ultra-important RCV (Replacement Cost Value) provision. We invite you to tap into our expertise to review if your coverage is keeping pace with your real estate properties.

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area since 1965. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As Trusted Choice™ independent insurance agency, we partner with various national and regional carriers, allowing for flexible coverage for each client’s unique circumstances. For more information on how you can leverage all your insurance to work best for you, and how we can secure the best insurance in the marketplace suited to your specific needs and business objectives, contact us today at (800) 862-6662 or www.dicksteininsurance.com.