Home make your insurance rates rise

Thursday, March 16th 2017. | Home Insurance

You’re finally ready to add that master bedroom addition to your home. Or maybe your expansion dreams call for a new two-car garage. You might even be planning a true backyard escape, installing an in-ground pool complete with a shower and changing room to go with it.

Before you hire a contractor, though, you need to call your homeowners insurance company.

Big home-improvement projects can mean big changes to your homeowners insurance. They can also mean big increases in the amount you pay each year to insure your residence.

It’s not all gloom, though: Certain home improvements can actually lower your premiums.

See also: Raising your home insurance deductible can save you big

“The big red flag is any renovation that changes the structure of your house,” says Patti Clement, first vice president and managing director at HUB International Northeast in New York City. “When you are adding to the existing structure of your house, your premium could rise. You definitely need to be in contact with your insurance company when you take on a major remodeling project.”
Bigger home means bigger premiums

Stacy Molinari, manager of personal lines with the Worcester, Mass., office of Insurance Marketing Agencies, says that any time a renovation makes your home larger, you can expect to pay more in homeowners insurance.

There’s a reason for this: It costs more to rebuild a larger home.

“If you add square footage you can expect your premiums to go up,” Molinari says. “When insurers estimate the cost of insuring a home they look at the costs of rebuilding it. Those costs will increase if you have a larger home.”

How much more you’ll pay depends on a variety of factors, Molinari says, including where you live, the type of addition you’re planning, how much larger you’re making your home and what materials you are using. Before construction begins, you should call your insurer to discuss the possible impact that your renovation project might have on your insurance premium.

New structures can add to costs

Adding structures to your property can also increase your premium. Say you build a new garage, new gazebo and an in-ground swimming pool. Standard insurance policies typically include coverage for outside structures, usually in the amount of 10 percent of your total homeowners insurance coverage, Molinari says.

So if all those new structures you are adding are particularly costly, you might need to boost your insurance coverage to adequately protect yourself should that pool house burn down. More coverage, of course, means a bigger insurance premium.

Then there’s that in-ground pool. Insurers don’t really like swimming pools. They are known as attractive nuisances. Insurers believe that if you have a swimming pool, you’re more likely to get sued. So you might need to increase your liability coverage after installing an in-ground pool. And don’t forget to tell your insurer that you’ve added a pool. If you don’t, you might face a huge bill, and find your insurer unwilling to help out financially, should someone sue you after an injury related to this new pool.

If a pool also increases the value of your home, you might again need to add more to your dwelling coverage. The bottom line? Installing a swimming pool could prove costly.

Saving money? Some improvements help

Don’t think that all home improvements will only pull your insurance premiums upward. Some improvements will actually result in lower insurance fees.

Clement says that any improvement to your home’s interior systems, such as your home’s heating, plumbing and electric, can lower your insurance premiums. That’s because new systems are less likely to result in burst pipes and electrical fires that end up costing insurers money in coverage, Clement says.

Adding a new home-security system or a gate around your home can lower your premium, too, as these improvements provided added protection against theft. A back-up power generator might also result in an insurance discount, Clement says.

“There are all kinds of things that can lower your premiums,” Clement says. “It’s a good idea to call your insurance agent before you make any changes. You might be surprised at how creative you can be to keep your insurance costs down.”


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