Renovating your home can have a big effect on your home insurance rates. That is why you need to talk to an insurance agent, such as Oliveira Insurance Agency, before engaging in a renovation project. The agent will help you understand the impact the renovation will have on your rates and the measures you can take to avoid rate hikes. Here are some of the factors that determine whether your rates will hike, decrease, or remain the same after a renovation project:
Effect on Reconstruction Cost
A remodeling project usually makes a house more expensive to reconstruct, but it can also lower the reconstruction cost. For example, if you finish the basement and turn it into an additional living space, you increase the reconstruction cost of your house. The insurance company will have to give you the same type of basement in case your house is damaged in a covered disaster; therefore, your insurance premiums may rise.
Effect on Personal Security
As you know, your insurance company will compensate you if your house is burglarized and your personal belongings are stolen. This means a renovation that makes your home more secure is also beneficial for the insurance company, and it may reward you with reduced premiums. Of course, the reverse is also true. For example, you may enjoy lower premiums when you install a state of the art surveillance system. Alternatively, your premiums may increase if you install weak glass doors and windows that burglars can easily break.
Effect Natural Disasters Preparedness
A standard home insurance policy may protect you from some natural disasters; for others, you may have to buy separate coverage. Whatever the nature of the natural disasters covered by your policy, anything that makes your house more susceptible to them can see your rates hike. At the same time, making your home more disaster-proof may see you enjoy home insurance discounts. For example, if you improve your home's drainage and make it more flood-proof, you may enjoy discounts on your flood insurance coverage.
Effect on Visitor Accidents
If someone gets injured in your home and sues you for damages, it is your homeowner's insurance company that actually signs the compensation check. Therefore, your home insurance carrier wants to see your home as safe as possible, and any reconstruction that interferes with that has the potential to increase your insurance premiums. For example, if you embark on a remodeling project that leaves some open holes or tunnels in your front yard, your rates may rise because such things increase the risk of slip and fall accidents.