Home ownership is a big responsibility and for the majority of homeowners their home represents their largest asset. Many people often view DIY programs and HGTV (headquartered in Knoxville, TN) for creative ideas on how to plan home renovations. After all, keeping a home in good repair and comfortable for one’s lifestyle can be expensive and frequently impacts the monthly household budget and disposable income. In fact, according to the Joint Center for Housing Studies of Harvard University “spending on improvements and repairs to both owner-occupied and rental properties hit a record of nearly $425 billion in 2017.” While this spending growth may slow a bit, it is important to remember if you are considering a renovation project, then don’t forget to remodel your homeowners insurance!
Some renovations do make good financial sense…
Many recent news articles have featured typical home renovations that are positive decisions to protect the value of your home and keep it in line for your own comfort and for resale. Here are just a few:
• Floors and ceilings – average cost $3,283
• Plumbing fixtures – average cost $1,360
• Upgraded kitchen appliances – average cost $570
• Windows and doors – average cost $3,422
• Water heater – average cost $976
• Roofing – average cost $7,674
• Lawn and landscape projects – average cost $2,497
• Adding or replacing central air conditioning – average cost $5,113
• Minor bathroom remodels – average cost $3,435
• Electrical work (replacing wiring, fuse boxes, breaker switches) – average cost $1,473
It is a quick list; however, should the typical homeowner undertake completing these improvements they will have spent on average $29,803.00! Yes, it does add up, but many of these improvements, as well as adding a security alarm system or emergency generator and removing a wood stove, may help lower your homeowner insurance premiums.
Home improvements that may raise your homeowner insurance premiums…
Depending on where you live or if your home is part of a homeowners association (HOA), renovations can require not only local building permits but also approval by the HOA. Therefore, your first priority should be to do your research. For example, does your project require a permit? Do you intend to handle the renovations as a DIY project or do you need a licensed professional? Have you discussed your plans with your insurance agent?
For sure, some improvements will increase your homeowner insurance premiums. Consider the following:
• Pool – the cost of building the pool and required fencing is only the beginning, each homeowner needs to review their homeowners policy for replacement, repairs, and the cost of increasing their personal liability coverage. According to Home Advisor, an average pool installation costs $26,405 with a typical range of $13,563 and $39,363. In Tennessee, the average cost is $20,760.
• Home business office – Storing inventory at your home, welcoming business customers into your home, and business equipment should be discussed with your insurance agent to determine the appropriate insurance policy and coverage required.
• Home addition – adding square footage or remodeling basement space will add value to your home. Again, before your start this type of project, review your plans with your insurance agent, as you will want the appropriate amount of coverage during the renovation process, as well as after the project is completed.
• Bath and kitchen upgrades – major upgrades to kitchens can average between $12,000 and $35,000, while a bathroom can average between $6000 and $15,000. These improvement types will increase your home’s value and usually increase your homeowners insurance premium.
In closing, make a list and check it twice…
Many people who undertake a home renovation project find it to be a wonderful experience. Of course, some will discover they are reliving the movie The Money Pit or have wandered into an episode of Home Improvement. However, if your project starts with meeting with your insurance agent, then you will be on your way to a successful renovation and a remodel of your homeowners insurance. Make a list, interview contractors, pull the needed permits, review your finances, keep copious written and visual (videos /photos) records, and if you have questions, then by all means ask.
Our John Bailey Company offers integrity, service and expertise. We are here to help you insure a great life.