Nine Things You Need to Tell Your Home Insurer
Purchasing a home comes with a lot of inevitable bills, be it repairs and renovations or essentials like homeowners insurance , which is surprisingly expensive. On average, homeowners pay about $1,428 per year for every $250,000 of coverage, which works out to about $120 per month. When you buy a home and take out a policy to protect it, everything is based on an estimate of the cost of restoring your home: that is, how much it would cost to replace it, more or less as is. This means that any time you make major changes to your home, you need to tell your insurer because you may have to adjust your coverage, which could raise or lower your rates.
Even if you don’t want your premiums to go up, you should still tell your insurer.
Why homeowners insurance rates are rising
Some renovations or renovations you do to your home will increase the cost of your insurance, but that’s because they increase the value of your home, so you need more coverage. If your home costs $50,000 more to replace after a disaster, you’ll need additional coverage or you won’t get enough money in the settlement to fully replace what you had. Here are some examples of changes that can (and should!) increase your rates:
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Additions. If you are adding living space and increasing the square footage of your home, you will need to tell your insurer so the policy can be adjusted to take into account the additional costs of rebuilding those extensions. This includes non-residential properties such as garages or sheds that add value in other ways.
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Ready premises. If you bought an unfinished basement with a dirt floor and concrete walls and turned it into a gaming paradise, you’ll need any insurance payout to cover it.
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New swimming pool. Insurance companies consider pools to be a huge liability, so adding a pool to your home will definitely increase your insurance costs . Additionally, you should probably consider adding insurance if you’re installing a pool—the Insurance Information Institute recommends $300,000 to $500,000 in additional coverage.
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Home business. If working from home means sitting at your kitchen table with your laptop, you probably don’t need to adjust your insurance. But if you’re starting a home-based business that requires any equipment to be installed, you should let your insurer know so they can determine whether you need additional coverage and higher rates.
Why homeowners insurance rates are falling
It’s not all doom and gloom when it comes to insurance rates and improving or renovating your home. If you make any of these repairs or renovations, be sure to tell your insurer because there’s a good chance your costs will actually go down :
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New roof. Replacing your roof usually lowers your rates because it more effectively protects everything under the roof. In fact, adding a new roof to your home can reduce your insurance premium by as much as 35% . And if your new roof comes with safety and storm-resistant features, you can get additional discounts. It’s definitely worth exploring.
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New windows. If you replaced your inefficient old windows that didn’t open all the way with shiny modern windows, you may well get a discount on your insurance costs due to the reduced likelihood of storm damage and increased safety.
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Modernized infrastructure. If all of your home’s electrical and/or plumbing fixtures are replaced and upgraded, you could see a significant reduction in your insurance costs. The older the original equipment, the more dramatic it can be. Upgrades to your heating, cooling and water heater systems can also result in lower insurance premiums, so let your insurer know about these changes right away.
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Safety. Have you added an alarm? Doorbell with camera? Your insurer will be happy to hear this and will likely give you a discount as a result.
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Fire extinguishing and flooding systems. Installing modern smoke detectors, leak detectors, and flood control technologies such as a sump pump or automatic water shutoff reduces the likelihood of your home being damaged or destroyed, which can result in lower insurance premiums.
Your homeowner’s insurance will never be free, but you can definitely save a few dollars on it simply by keeping your insurer in the know. This way, you’ll get a better, safer home and a lower monthly bill.