Could a Renovation Void Your Property Insurance Coverage?
Have you read every single sentence of your property insurance policy? If not, you are not alone. Property insurance policies are long and complicated. Most people skim through vast stretches of the policy to get to the important sections. This habit can sometimes create situations in which unsuspecting homeowners run into surprises. For instance, did you know that an unreported renovation might void part, or all, of your homeowner’s insurance coverage?
Renovations May Cause Your Insurance Rates to Rise
Why? Because a major renovation may dramatically increase the overall value of and cost to repair your property. While many different factors go into calculating your insurance premiums, none is more important than the cost to replace what you have insured. If your home is going to be worth more, that of course also means that it is going to cost more if you have to rebuild it. As such, a comprehensive insurance policy is likely to cost more as well. In most cases, renovations only cause minor increases in your long-term insurance rate. However, this is not the only issue. While your home is actually being renovated, there is a higher risk that it might be damaged. For this additional risk, you may need to get special temporary coverage.
You May Be Forced to Pay a Builder’s Risk Premium
Homeowners considering renovations should know that their insurer may attach a temporary builder’s risk rider to their premiums during the period that construction is taking place. Builder’s risk insurance is a special type of protection that insures property owners against any damage that occurs because of construction that is occurring on their property. For example, if your bathroom is being renovated and a pipe bursts and floods your kitchen, you may need builder’s risk insurance to obtain coverage for that event. If you fail to notify the insurance company about ongoing renovations, and don’t purchase builder’s risk coverage if required by your general policy, you could risk your claim being denied.
Play it Safe: Notify Your Insurer Before Renovating
The best practice is always advanced notification. Doing this does not necessarily mean that you will be able to maintain your current coverage through the completion of the renovation; however, it will give the insurance company a chance to tell you what you need to do to stay fully protected.
Was Your Property Insurance Claim Denied?
We can help. At Geyer Fuxa Tyler, our property insurance attorneys have helped many policyholders recover the full and fair settlement offer that they rightfully deserve. If your property insurance claim has been denied for any reason, let us review your claim for free. We will let you know if you have a viable case. Our firm represents property owners throughout Broward County, including in Deerfield Beach, Miramar and Hollywood.