You’ve found your new home. It has great bones, hasn’t been updated, and you can make it into something special! All it needs is a little, or maybe a lot, of remodeling love to go with your vision of how to bring it up to date and make it uniquely yours. If you’re planning something like this, don’t let home insurance derail your vision.
You may need something other than home insurance to tackle such a project; not all home insurance companies will write a policy for a home about to be or actively being remodeled. To determine which type of policy will provide the right kind of coverage and protection for you two questions need to be addressed:
- Will the home be occupied during the remodeling project?
- If not, how long will it take to complete the project, assuming everything stays on schedule?
Occupied Remodel: If the home is going to be occupied during the remodel and the project will be completed in a couple of weeks, then a standard home insurance policy will work in most cases. Most home insurance companies won’t write a policy on vacant home while it’s being worked on. Vacant remodel projects increase the risk to the insurance company a claim will be filed for vandalism, theft, or even a fire. If your remodel is short term, or more cosmetic in nature, and you are willing to live through it, then start with home insurance policy.
Unoccupied Remodel: If the project will last more than a couple of weeks because it’s more extensive, such as a building out a master suite and bath or gutting the kitchen to put in a new one with flooring, I suggest a vacant remodel or builder’s risk policy. These policies usually run from 30 days to 1 year and are used when the home will be vacant throughout the remodel.
Both vacant remodel and builder’s risk policies are designed to cover the home as it is now, what insurance agents refer to as the existing structure, as well as the renovations. Extensive projects, such as these, typically increase the home’s value, and both policies cover the before, during, and completed project valuation change. In addition, these policies usually come with some level of liability coverage to project the homeowner should a worker, or someone visiting the home gets hurt while the remodel is underway.
Determining whether a vacant remodel or builders risk policy is needed depends on the project’s timeframe and if structural changes will be made as a part of the project.
- I usually recommend a vacant remodel policy for projects which will be completed in 6 months or less and does not involve structural changes.
- Conversely if the project will go 6 months or more or involves structural changes such as adding square footage or a second story, I recommend a builder’s risk policy.
What did or will your remodel project entail? Share your pictures, as well as questions, comments, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!