Remodeling? Make Sure Your Insurance is Up to Par


According to the BuildFax Remodeling Index (BFRI), remodeling reached a record high during this past summer.  The company attributes this to the many who are choosing to stay put and invest in home improvements, as opposed to putting their home on the market.   Markets with slow or limited sales are making potential sellers think that the best alternative in the short term is remodeling to spruce up their homes.  They can enjoy the fruits of the updates and position themselves better for a sale in the near future. A home that has been updated sells better in any market!

The latest BFRI indicates that residential remodeling activity registered the 21st-straight month of year-over-year gains, demonstrating that many Americans are continuing to remodel their current homes. The data shows July 2011 as the month with the highest level of remodeling activity since the Index was introduced in 2004.

When it comes to remodeling your home, there are important insurance issues to take into consideration. For example, if you are planning an addition to your home, evaluate the materials used. Wood-framed structures are highly flammable and will cost more to insure, whereas cement- or steel-framed structures will cost less because they are less likely to succumb to fire or adverse weather conditions.

Once your addition or remodel is completed, it’s critical to make sure your insurance is in line with your home improvements. Many homeowners neglect to calculate the increased value of their home caused by a remodel/addition and fail to secure the necessary coverage. If you have a "guaranteed replacement value" policy, which all homeowners should, noting the new value of your home post-remodel is essential to be assured of sufficient coverage in the event of a loss..

In all cases, the following steps can help you save money on rates:

  • Install a security system. A burglar alarm that is monitored by a central station, or that is tied directly to a local police station, can help lower a home owner's annual premiums by 5% or more.
  • Install additional smoke alarms. Smoke alarms are another way to reduce your homeowners' insurance premiums. While these are standard in most new houses, installing them in older homes can save the homeowner 10% or more on annual premiums. Make sure you add the necessary number of smoke alarms to correspond with your remodel or addition.
  • Install dead bolt locks on your exterior doors.
  • Raise your deductible. Like health insurance or car insurance, the higher the deductible you choose, the lower the annual premiums will be. This will mean, however, that you’ll need to foot the bill for smaller home repairs that don’t meet your deductible.
Whether you have remodeled or not, be sure to review your home insurance policy at least once a year and make note of any changes that could lower your premium, like a burglar alarm, sprinkler system or even the removal of a trampoline, as an example. Neighborhood changes can also affect your rates -  the addition of a fire hydrant within 100 feet of your home, a new firehouse nearby, a security gate limiting access to the community.

As a Member of the Top 5 in Real Estate Network®, my team and I have a wealth of current real estate and financing information and homeowner trends that may be of interest to you.   Feel free to contact our team any time to learn more  and be sure to forward this article on to any friends or family that may be interested in real estate topics as well.  We'll always enjoy talking with you!