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What You May NOT Know About Insuring a Home Remodel
Please let us know if you are planning to do any home remodeling or renovations. While your homeowner's insurance policy includes special replacement-cost provisions for homes under construction or renovation, it is critical that we review the scope of the project before you begin. This is due to several new risks to which a homeowner may be exposed.
For example, assume your home is insured for $800,000 and you begin a construction project that adds square footage and updates the kitchen and bathrooms. The cost of your project is $250,000 and should be completed within 120 days. If you plan to move out of the home once the kitchen and bathroom remodeling phase begins, your home is now vacant and with that new circumstance comes a whole new set of risks of which your insurance carrier must be made aware.
Also, with the increase in your home’s value we want to be sure that your coverage increases appropriately.
Some other important considerations you need to be aware of are:
1. The risks of an insurance loss increase during a construction project -- particularly near the end of the project, when various subcontractors are in the house at the same time. With this issue in mind, your insurance company might require additional safety measures to protect your home. These measures could include placing fire extinguishers on each floor of the home and installing a temporary alarm system.
2. Acting as your own general contractor can be problematic and also complicate insuring your home under construction or renovation.
Suppose you are acting as your own general contractor and you make a mistake that contributes to a loss involving your home. For example, you fail to obtain proof of insurance from a painter who accidentally burns down the house by leaving a burning cigarette near some solvents.
Your insurance company would pay the claim but would have no way to recover all or part of its expenses because (1) the painter has no insurance, and (2) you are the contractor and the company cannot take action against its own customer.
Given this scenario, most insurance companies choose not to provide coverage at all when a customer acts as his or her own general contractor.
3. If you are using a licensed and insured general contractor, make sure your contract does not include a "waiver of subrogation clause." This clause would block your insurance company from attempting recovery from the general contractor if the contractor contributed to a covered cause of loss.
Please contact me, or any member of The Bensman Group team, at 847-572-0800 or email@example.com to advise us of any home remodeling plans.
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