Builders' Risk Insurance Coverage

What would you say is the best part of being a homeowner as opposed to renting? For most people, it's knowing that they can do just about anything they want with their house and no one's going to argue with them about it! There's a certain amount of freedom that goes along with being a homeowner that you're just not going to find when you're renting (like the freedom to start ripping down walls if you want to!). Before you launch all of those renovation projects you've got broiling around in your head, however, make sure you let your home insurance company know what's going on.

There are a couple of reasons home insurance companies heed to be kept in the loop when you're talking about renovating your house. First and foremost, let's talk about relative home value. Your home's value will usually increase, sometimes dramatically, when you renovate. Since the value's going up, you want to make sure your insurance coverage goes up too. Some home try to avoid this step in an attempt to keep their home insurance rates as low as possible, which is a good short term gain with catastrophic long term consequences.

It's no fun to get quotes to rebuild your home only to find out that because you never raised your level of coverage you're underinsured. That's like having to pay for those renovations all over again.

The other thing you want to keep in mind is that renovations can save you some big bucks on your home insurance rates. Yes, we just said that renovations raised the cost of your home insurance. Keep reading. If your renovations are making your home safer as well as more valuable you're going to be in an excellent position to save money on your insurance. Home insurance companies love low risk homes. By lowering your risk factor you're going to lower your insurance risks at the same time.

That's not the main reason you want to make sure your home insurance company knows about your renovation process, however. When you signed your insurance policy did you make sure to go through and read the fine print? If you did you probably already know that your insurer isn't going to cover your home (at all) during the time you're renovating.

That's a nasty little surprise that way too many home don't find out about until after the fact, when it's way too late to do anything about it. Since the risk of fire and water damage go flying during renovations (especially if you're doing the renovations yourself) your home insurance doesn't want to open themselves up to that much risk. The good news is, most providers give you the option of purchasing builder's risk insurance.

Builder's risk insurance takes the place of your regular home insurance coverage during the renovation period, and if its purchased before you begin renovations may even extend to cover your construction materials if they're lost courtesy of one disaster or another. Even if it doesn't cover your building materials, however, builder's risk insurance will make sure you're never left homeless with nowhere to turn because of an accident that took place during the renovation process.

Make sure you talk to your home insurance provider before you pick up that hammer. It might turn out to be the best decision you ever make.