Chances are you created a project budget for your remodeling or construction project.
But chances are just as good that you neglected to tack on an extra line item for added insurance.
Your standard homeowners policy probably won’t cover every aspect of the project. Most home insurance is intended to protect what’s already there, not what you plan to add, improve or renovate.
Lost, damaged or stolen materials will need to be replaced. If you don’t take adequate security precautions, portions of a standard policy may be void. If a worker, neighbor or passerby is injured because of some lapse in the process that could be linked to you, you could be on the wrong end of a legal skirmish.
It will be worth your time to invite your insurance agent for an informal discussion or walk-through of your project intentions. The agent will be able to suggest riders to existing policies that won’t cost an arm and a leg. The riders will be for the term of the project itself.
Eric Goldberg, associate general counsel of the American Insurance Association, says homeowners should chiefly be concerned about liability. For example, if any portion of your project would fall over or otherwise cause damage to neighboring property, you could be liable for repairs.
Suggestions can range from roping off excavation holes to secure off-site storage of materials and appliances. If you live elsewhere during the renovation period, it may be recommended you might hire a drive-by security service to check on the work site during evening hours.
It will be advantageous to document all materials, safety measures and other insurance-related steps you take. Should an unfortunate event occur, you’ll need such paperwork and perhaps photographic or video documentation.
So what can you expect to pay for this protection? According to several insurance sources, the cost will vary by the size and scope of project. Since the coverage is of limited duration, the cost of added coverage could be as little as an additional $200 to a high of roughly $750.
Location or isolation of your home, availability of street lighting and nearby neighbors who can keep an eye open for events are also variables.
On top of liability and theft coverage is a bump in total coverage for your home. Goldberg says that “with the way real estate prices are going, if the improvement increases the overall value of your home, you’ll need to be covered.” It can be particularly unfortunate if the house is damaged by fire or storms and you won’t receive enough insurance proceeds to rebuild.
Portions of the project will be covered by the policies of your contractor and subcontractors. Sit down with your general contractor for their two cents on insurance issues.
In any event, insist on viewing original copies of insurance policies. Contractors should have policies for immediate display. Don’t accept photo copies as these are easily altered.