To make sure your home remodeling project goes smoothly, you
need to do more than find the right contractors and sign all the
necessary forms. You also should contact your homeowners insurance
company to make sure you have the coverage you need to protect
yourself financially during the project.
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According to the Insurance Information Institute, you should let
your insurance agent know about your remodeling plans and ask
whether you need to update your coverage -- or add coverage. For
example, you might need to increase the amount of
liability protection
you have if you're tackling the remodeling yourself with the help
of friends and family (see
Why You Should Have Umbrella Liability
Insurance
). Make sure you have enough no-fault medical protection on your
policy to protect you financially if someone gets injured while
helping you with the remodeling project.
For bigger projects that require a professional contractor,
consider getting a
builder's risk policy
, or course or construction policy, to protect your home from
damage during construction. This policy will provide coverage for
wind and rain damage, theft of materials and vandalism.
The III also recommends that you take these steps to protect
yourself financially during a remodeling project:
Verify that your contractor has insurance
coverage.
The contractor should have a commercial business/general liability
policy and a workers compensation policy. This will help protect
you from lawsuits if a worker is injured during the project. If the
contractor isn't adequately insured or won't verify his coverage,
III recommends hiring someone else.
Keep records and receipts.
Hang on to copies of any contracts and receipts for work done and
materials purchased. Also keep receipts of new belongings that you
purchase as part of the remodeling and update your home inventory
(if you don't already have one, you can use the III's free
Know Your Stuff
software). Also keep a visual record of the work done by taking
pictures before, during and after the renovation.
Update your insurance after the renovation.
You may need to increase the amount of coverage you have to rebuild
your home if it has increased in size as a result of the
renovation. Your insurance company will need records and receipts
to assess your needs. And you may need more liability protection if
you added a pool or hot tub. You might also need to purchase more
coverage if you bought art or expensive items. See
What Does Homeowners Insurance Really Cover?
to find out whether you should buy a floater or endorsement to
cover valuable items.
Ask about discounts.
You might be able to get your premium lowered by at least 5% if you
installed stronger doors, smoke detectors, an alarm system or
dead-bolt locks. Some insurers offer discounts of up to 20% if you
install a sprinkler system or alarm that notifies the police, fire
department or other monitoring station of an emergency. You may
qualify for a discount of at least 5 percent if you installed
stronger doors, smoke detectors, a burglar alarm or dead-bolt
locks. If you updated the heating, plumbing or electrical systems
or made your home more storm-proof, you may get a reduction in your
premium because you've reduced the risk of damage.
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