The Wyatt Dowling way

Does Your Insurer Know about Your DIY Projects?

August 12, 2024

Did you know that renovating your home without updating your insurance could result in a denied claim in the future?

DIY projects can be a fun and cost-effective way to upgrade your home, but they come with responsibilities, especially when it comes to your home insurance.

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How DIY projects can affect your home insurance

Increases the value of your home:

Major renovations, such as adding a new room or upgrading the kitchen or bathroom, can increase the value of your home. This increased value may require you to adjust your home insurance coverage to ensure that your property is adequately insured.

If you neglect to update your home insurance policy, you might find yourself underinsured in the event of a claim.

Could add new risks:

Certain DIY projects can alter the risk profile of your home. For instance, installing a pool or a wood-burning stove would naturally increase the risk of swimming accidents or fire. Insurance companies need to know about these changes to make sure your home is still fully covered!

Needs to be compliant with building codes:

Home renovations must comply with local building codes and regulations. If your DIY projects are not up to code, it can lead to denied insurance claims. This is why it’s so important to check the legal standards in your area and make sure everything is good to go.

Potential for damage:

DIY projects inherently carry the risk of accidental damage to your property. Mistakes in your building process can lead to significant repair costs, and if the damage is not covered by your current policy, you could be left paying out of pocket.

Most insurance policies will not cover self-inflicted construction damage to your home or accidents that happened partway through an overhaul performed by non-professionals.

This is also why it’s important to ask about your construction team’s credentials and insurance coverage if you do hire out part of a project.

Informing your insurance company about renovations

If you’re planning on doing more than painting the walls or putting up some wallpaper, it’s always a good idea to let your insurance provider know your plans. Taking this quick precaution means that you know for sure that your policy reflects the current value and condition of your home, your premium is set correctly, and you’ve avoided the possibility of future claim denials.

Not all DIY projects require you to notify your insurance company, but you will definitely want to bring up the following:

1. Structural changes

○ Room additions: Adding a new room, such as an extra bedroom or a sunroom, can increase your home's square footage and value, necessitating a policy adjustment.

○ Removing walls: Knocking down walls to create open floor plans can alter the structural integrity of your home.

2. Major renovations

○ Kitchen or bathroom remodels: Significant upgrades to kitchens or bathrooms often increase your home's value. These high-cost areas should be reported to ensure proper coverage.

○ Basement finishing: Converting a basement into a livable space can add substantial value and risk, particularly if it includes electrical or plumbing work.

3. Roof and siding

○ Roof replacement: Updating your roof can positively affect your insurance premiums, as a new roof might lower your risk of leaks and damage.

○ New siding: Changing the exterior siding can positively impact your home's protection against weather-related damage.

4. Heating, ventilation, and air conditioning (HVAC)

○ HVAC system upgrades: Installing a new HVAC system can affect your home’s risk profile, especially if it includes complex electrical work.

5. Safety and security enhancements

○ Security systems: Adding a comprehensive security system, including alarms and surveillance cameras, can reduce your insurance premiums by lowering the risk of theft.

○ Fire suppression systems: Installing smoke detectors, fire alarms, and sprinkler systems can also positively impact your premiums by enhancing safety.

6. Plumbing and electrical work

○ Rewiring: Upgrading your electrical system can reduce the risk of fires, which might affect your insurance coverage and premiums.

○ Plumbing overhaul: Major plumbing upgrades, such as replacing old pipes, can mitigate the risk of water damage, positively impacting your policy.

7. Exterior improvements

○ Pools and hot tubs: Adding a pool or hot tub increases the risk of accidents and injuries, necessitating a policy review and likely an increase in liability coverage.

○ Decks and patios: Building new outdoor structures can affect your home’s value and risk profile.

8. Energy efficiency upgrades

○ Solar panels: Installing solar panels can impact your home's value and might require additional coverage for the panels themselves.

○ Energy-efficient windows: While these can lower your utility bills, they also add value to your home and should be reported to your insurer.

Insurance tips for DIY projects

1. Plan thoroughly: Before starting any project, make a detailed plan. This includes budgeting, gathering materials, and understanding the scope of work. Not only will this make it easier to communicate the creative vision to your insurance expert, it’ll help the build go more smoothly.
2. Know your limits: Be realistic about your skills and experience. Some projects, such as electrical work or plumbing, do require professional expertise. Attempting complex tasks without the necessary skills can lead to accidents and subpar or even dangerous results. Professional companies or contractors have special kinds of insurance to protect against damages for these specific kinds of projects.
3. Obtain necessary permits: Ensure you have the required permits for your renovation projects. This not only keeps you compliant with local laws but also ensures that your insurance coverage remains valid.
4. Use quality materials: For nearly all projects, you should invest in quality materials that meet safety standards. Cutting corners with cheap materials can lead to long-term issues and potentially void your insurance coverage if they contribute to damage. This is especially true for any DIYs that affect windows, tiles, or grout in your home, because of the potential for water damage.
5. Keep records: Document your renovation process, including receipts, permits, and photos of the work. Not only is it fun to have a before/after shot, but this documentation can also be a lifesaver if you need to make an insurance claim, a tax write-off, or sell your home in the future.
6. Consult professionals: When in doubt, consult the experts for advice. Most business or contractors offer free or cheap consultations to help assess a future project’s needs. Even if you don’t end up hiring their professional services, this is a great affordable way to make sure you know the risks and potential complications of your next big project.