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How Does Remodeling Affect Your Home Insurance?

Improving your home often elevates the value of your property and will likely require you to increase your insurance coverage to cover that increased value. This increase in insurance may increase your premiums. However, this added protection is critical to make sure that you can recoup your loss in the event of a disaster.

Material Change of Risk

If you remodel or renovate your home and raise the value of the property, you increase the risk that your insurance company is taking in covering the property. Because you can control the process of renovation, it's your responsibility to let the insurer know of such changes. According to Murfreesboro Insurance, homeowner’s insurance protects a home and its contents in case of disaster and protects the owner from liability in case an accident occurs on the property. Your insurance policy needs to cover your home as it is valued, and renovation and remodeling can change the value of your home.

Guaranteed Replacement Cost

Replacement cost insurance pays out damages equal to the replacement value of what you had before the disaster. Guaranteed replacement cost insurance (GRC) goes a step above. According to IRMI, GRC won't cover the cost of bringing your older home up to current standards and building codes, but it will cover all expenses to bring it back to its former condition. If you add a second story to your home, build an addition or expand the foundation footprint by digging a basement, it's critical that you get your insurance agent involved so you can get the coverage you need to cover the replacement cost of your home as it's currently valued.

Insuring During the Remodel

If you have hired a contractor to help with your remodel, be sure to check them out with the Better Business Bureau, review their references and ask for information on their liability insurance coverage. You're responsible for contacting your insurance professional before the remodel to make sure you can get coverage. You'll also need to let them know you need to expand your coverage once the remodel is done. However, your contractor must carry insurance, including worker's compensation and contractor's liability, to cover any accidents in your home.

Remodeling and renovation take a lot of homework. You'll likely need to work with a general contractor who can manage all subcontractors on the job site. You'll also need to review your current insurance and confirm access to expanded coverage after the remodel. However, if your neighborhood and home's value can justify the expansion, many remodeling projects can add to the resale value of your home.


Remodeling can be a lot of work, but it can make your house look so much more beautiful. If you’re remodeling your bathroom, try putting one of our vanities in it!