A renovation is one of the few events that changes a home policy in every direction at once. The house becomes worth more to rebuild, strangers work on the property, materials sit exposed, and for a period the structure may be open to weather.
Most of that is manageable with a phone call before work begins. The problems come from finding out afterward.
Tell your insurer before the work starts
Insurers ask about structural changes for reasons that affect both coverage and eligibility. A call before the project starts lets them tell you what they need, and it creates a record that you disclosed it.
What they will typically want to know:
- The scope of work and whether the structure is being altered or extended
- The expected cost and duration
- Whether anyone will be living in the home during the work
- Whether the roof will be open at any point
- Whether the contractor is licensed and insured
- Whether systems such as electrical, plumbing or heating are being replaced
Two answers matter more than the others. Vacancy is the big one: many policies restrict coverage once a home has been unoccupied beyond a set period, and a gut renovation that empties the house can trip that provision. See vacant and unoccupied homes. An open roof changes the exposure to weather considerably, and some policies limit coverage for water entering through an opening that was not created by a covered peril.
Who covers what during construction
Responsibility splits differently depending on the size and structure of the project.
| Situation | Coverage typically responding |
|---|---|
| Damage to the existing structure from a covered peril | Your homeowners policy, subject to any conditions attached to the renovation |
| Damage caused by the contractor's work | The contractor's general liability policy |
| Injury to the contractor's employees | The contractor's workers compensation |
| Injury to a visitor caused by site conditions | Depends on the facts and on control of the site |
| Materials delivered and stored on site | Varies; may be the contractor's, may be yours, may be neither until installed |
| A major addition or a substantially rebuilt structure | Often a builder's risk policy, arranged by the owner or the contractor |
Builder's risk, sometimes called a course of construction policy, covers a structure while it is being built or substantially renovated, including materials on site and often in transit. For a large project, ask explicitly who is carrying it and what it covers. For a kitchen remodel, it is usually unnecessary.
Verify the contractor's insurance yourself
Ask for a certificate of insurance sent directly by the contractor's insurance agent rather than a copy handed to you, and check:
- General liability, and that the limits are proportionate to the project
- Workers compensation, which is the coverage that matters if someone is hurt on your property. Requirements vary by state and by whether the worker is an employee or a subcontractor
- That the policy is currently in force, with dates covering the whole project
- Licensing, through your state or local licensing authority
If a contractor has no workers compensation coverage and someone is injured, the claim can end up pointed at you. Your homeowners liability may respond, or may not, depending on the facts and your state's rules on domestic and casual labor.
Permits belong in the same conversation. Unpermitted work can create problems at claim time, at resale, and with your local building department. See ordinance or law coverage for what happens when code requirements enter a rebuild.
After the work: your rebuild cost changed
This is the step people skip, and it is the one that costs money later.
Coverage A should reflect what it costs to rebuild the home as it now stands. Finishing a basement, adding a bathroom, extending the footprint or upgrading finishes all raise that number, and the policy does not learn about it on its own.
An underinsured home is not just short on the dwelling limit. Coverages B, C and D are commonly written as percentages of Coverage A, so a low dwelling limit quietly reduces the coverage for detached structures, personal property and loss of use as well. See how much dwelling coverage do you need.
Renovations that most often need a limit increase:
- Additions and any change to square footage
- Finished basements and attic conversions
- Kitchen and bathroom renovations with substantial finish upgrades
- Roof replacement with a different material
- Structural work, including foundations and load-bearing changes
- Detached structure work, which affects Coverage B
Renovations that can help
Not everything about a renovation raises exposure. Several types of work commonly improve eligibility or qualify for credits, though availability varies by insurer and state:
- A new roof, particularly with impact-resistant materials or to a fortified standard
- Electrical service and wiring replacement, especially where older wiring types were present
- Plumbing replacement, which reduces water claim exposure
- Heating system replacement
- Water leak detection and automatic shutoff devices
- Monitored security and fire alarm systems
- Storm shutters or impact-rated openings in wind-exposed areas
- Seismic retrofit where applicable
Tell your insurer about these too. Credits are not applied automatically. See insurance discounts worth asking about.
Features that change your liability picture
Some projects add exposure that has nothing to do with the building's value.
A pool, a hot tub, a trampoline, a treehouse or a large deck all raise personal liability considerations, and some affect eligibility with certain insurers. Fencing and access controls matter both for safety and for what an underwriter will accept. See home liability.
If the renovation creates a rentable space, an accessory dwelling unit or a home office that clients will visit, the use of the property has changed, and that is a separate conversation. See running a business from home, short-term rentals and home insurance and landlord insurance.
Documentation worth keeping
Renovation paperwork is claim evidence. Keep, in one place:
- Contracts, invoices and proof of payment
- Permits and inspection sign-offs
- Photographs at each stage, including inside walls before they are closed
- Specifications for materials and finishes
- Warranties for roofing, windows, appliances and systems
- Contractor certificates of insurance
If a claim later involves the renovated area, this is what establishes what was there and what it cost. Update your home inventory at the same time. See building a home inventory.
A short sequence
- Call your insurer with the scope before work begins
- Confirm whether occupancy or an open roof affects your coverage
- Verify contractor liability, workers compensation and licensing
- Confirm who carries builder's risk on a large project, if anyone
- Pull permits
- Photograph and document throughout
- Update Coverage A and any affected limits when the work is done
- Ask about credits for new systems and materials
- Reassess liability limits if the project added a rated feature
Related reading: what homeowners insurance covers, water damage: what a home policy covers, and roof age, roof claims and payment schedules.
Coverage during construction, vacancy provisions, builder's risk availability, contractor insurance requirements and mitigation credits vary by insurer, by contractor and by state, and your policy documents and state law control. For your own situation, speak with a licensed agent, your insurer, or your state's Department of Insurance. You can also request home insurance quotes and get connected with licensed providers in your area.