How Home Renovations Can Impact Your Insurance Rates

When you decide to renovate your home, you’re likely thinking about improving comfort, functionality, and property value. But there’s another important factor to keep in mind, your homeowners insurance. Whether you’re adding a new deck, finishing a basement, or remodeling your kitchen, these changes can directly affect your insurance rates and coverage needs. At Anderson Insurance Agency, we’re here to help you understand how renovations influence your policy so you can stay protected without any surprises.

1. Why Renovations Affect Insurance

Home insurance rates are based on several factors, including the value of your home and the cost to rebuild it after a loss. When you make upgrades or additions, you’re often increasing both the home’s replacement cost and its overall risk exposure.

For example:

• A finished basement adds square footage and valuable fixtures that may increase rebuilding costs after a flood or fire.
• A new pool adds potential liability if someone gets injured.
• An upgraded kitchen with high-end appliances increases the home’s total value.

Insurance companies use this information to reassess your coverage needs and potentially your premium to ensure you’re fully protected.

2. Renovations That Can Increase Your Premium

Some projects make your home more expensive to repair or pose higher risks, which can lead to higher premiums. Common examples include:

Adding a pool or hot tub: While great for relaxation, pools and hot tubs increase liability risk. Most insurers will recommend or require additional liability coverage or an umbrella policy to protect you in case of an accident.

Home additions and finished basements: When you add square footage or convert unfinished areas into livable spaces, your home’s rebuild cost rises and so can your insurance premium.

Kitchen and bathroom remodels: High-end materials like granite countertops, custom cabinetry, and luxury fixtures increase the home’s value, which means you may need more coverage to fully protect your investment.

Decks and patios: Outdoor living spaces enhance curb appeal but also introduce additional risk factors, especially if attached to the home.

Smart home systems: Surprisingly, some home technology upgrades can increase your coverage needs, especially if expensive electronics or integrated systems are installed.

3. Renovations That Can Lower Your Premium

Not all renovations raise your rates, some can actually help reduce them. Improvements that enhance safety, security, or energy efficiency can make your home less risky to insure.

Roof replacement: A new, durable roof can protect your home from water damage and severe weather, potentially lowering your premium.

Electrical and plumbing upgrades: Replacing outdated wiring or pipes can reduce the risk of fire and water damage, both major concerns for insurers.

Installing a security system: Adding monitored alarm systems, cameras, or smart locks can deter break-ins and may qualify you for discounts.

Upgrading windows and doors: Impact-resistant or storm-rated windows can protect your home from severe weather, while upgraded doors improve home security.

Adding a generator: Backup power systems can prevent costly damage during outages, particularly for homes with sump pumps or refrigerated goods.

4. Always Update Your Insurance After Renovations

One of the biggest mistakes homeowners make is failing to update their insurance policy after making major improvements. If your policy doesn’t reflect the current value and condition of your home, you could find yourself underinsured if disaster strikes.

After completing renovations, contact your insurance agent to:

• Review your new replacement cost value.
• Ensure your personal property coverage reflects any new purchases (like appliances or furniture).
• Adjust liability coverage if necessary (especially for pools, decks, or additions).
• Explore potential discounts for safety upgrades.

Document your renovations with photos, receipts, and contractor invoices, this helps your insurer update your policy accurately.

5. Partner with a Local Expert

Every renovation is unique, and insurance impacts can vary based on location, materials, and the extent of the work. That’s why it’s important to work with a local, trusted agent who understands your home and your needs.

At Anderson Insurance Agency, we take the time to review your coverage and ensure your home is protected from every angle, before, during, and after your renovation. We’ll help you find the right balance between comprehensive coverage and affordable rates.

Home renovations are exciting opportunities to improve your living space and increase your property value. But they also change your insurance needs, sometimes in ways homeowners don’t realize until it’s too late.

Before you pick up that hammer or hire a contractor, take a moment to talk with your insurance agent. With proper planning, your renovation can enhance not just your home’s comfort and beauty, but also its protection.