by Guest » Fri Apr 13, 2012 01:07 pm
How will my insurers react if I want to renovate or rebuild my house later on ? Will my rates change in any way ? Is there any special way I can get coverage for the purpose ? Can they stop me from doing what I want ?
Posted: Sat Apr 21, 2012 05:47 am Post Subject: Home insurance for renovation
The reactions are unpredictable. it varies from insurer to insurer. It is advisable to have a discussion with your insurer first, stating the reasons for which you want to renovate your house, and the extent of renovation.
However, the value of a home usually increases after renovation. Thus, you may need to pay more after you renovate your house.
Moreover, significant changes in your home may also bring about some change in the policy terms and conditions.
Posted: Sat Apr 21, 2012 10:51 pm Post Subject:
Renovating or remodeling your home will have some effect on the insurance premium you pay. If you make considerable upgrades, it will increase the replacement cost of the dwelling, which will raise your cost of insurance. However, certain upgrades, such as installing a fire sprinkler system and/or a central-station monitored fire/burglary alarm system can lower your premium some.
If all you are doing is "modernizing" without making major upgrades, then don't expect too much impact on your premiums. Everything is based on REPLACEMENT COST, not market value.
Making upgrades to wiring and plumbing systems will have long term benefits, and may increase the market value of your home, but will be unlikely to alter your premiums much, if at all. Unless you are completely rebuilding from the ground up, most insurers will still consider the age of your home based on its original construction date, even if you completely gut and replace all of the interior.
I did exactly that in 2007-2008, knocked down three of four exterior walls, replaced all the wiring, plumbing, and drywall, and made extensive upgrades, including an entire new roof-truss system, and because some insurance companies consider my area a "fire zone", I installed fireproof concrete roof tile. and fireproofed all of the framing lumber with No-Burn. But I can't get credit for "new construction" [although, compared to all the other homes in the neighborhood, mine is essentially new] or obtain any special benefit from the extraordinary fireproofing measures.
Your decision to remodel or renovate should be based on whether you plan to stay put for a while and enjoy what you are planning to do, not the cost of your insurance.
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