When Home Insurance Doesn’t Cover Your Remodel Project

Last week, I wrote about when home insurance may cover a remodel project (see https://wiseinsurancegroup.com/will-home-insurance-policy-cover-remodel-project/). It may hinge on if the home is occupied as most home insurance companies do not want to write a policy when a home is vacant. In cases when your home insurance policy won’t cover the project, then I suggest either a vacant remodel or builder’s risk policy.

Builder’s risk and vacant remodel policies are ideal policies in a couple of instances including:

  • When the remodel project will occur before moving into the home you’ve purchased.
  • When vacating the home for several months due to the extensiveness of the project (adding a second story, a new wing, etc.).
  • Tearing down the existing structure and rebuilding a new home.

There are some similarities between a vacant remodel and a builder’s risk policy.

  • They both cover the existing structure and the addition
  • They provide coverage for common perils such as damage from fire, lightning strike, water, etc.
  • Personal liability and medical coverage may be included.
  • Neither covers damage or theft of tools.
  • Both can be written to last up to a year or for a shorter term such as 90 days or 6 months.

When the project is complete then the home insurance policy is ready to take over. This may occur when a certificate of occupancy is issued.

Vacant remodel and builders risk insurance policies also have their differences which help me determine which one to recommend. These include:

  • Most vacant remodel policies do not provide coverage if structural changes will be made to the home while many builders risk policies will cover them.
  • For the builder’s risk policy to cover structural changes such as moving or removing load bearing walls, adding a story or a wing, most underwriters will require documentation from a structural engineer before the policy can be bound.
  • Builders risk policies may provide optional coverage for materials, appliances, fixtures, etc. while in transit or stored on-site.
  • Builders risk policies can be written for ground up or all new construction while vacant remodel policies are designed for remodeling of an existing home.

Which one is right for you depends on several factors such as how extensive the project is, its length, cost, and whether structural changes are needed. Pricing between the two can be comparable or significantly different. I review both types when quoting a prospective client’s project to ensure we’re providing the best coverage and the best value. What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

Share this post with your friends