A friend of mine texted me the other day and asked me to quote her home insurance. I called her to discuss some questions I had about her home when she informed me she would be starting a remodel project in the next week or two which coincided with when she wanted to start a new policy. Her concern was if she changed home insurance now, would it cover her home remodel project?
There are a couple of issues to address when remodeling a home, whether it’s for a new purchase or an existing home that needs to be freshened up. The three things I need to know are:
- How long the project will take?
- Will it be lived in, or occupied, during the remodel?
- Who’s doing the work?
All three of these factors potentially impact a home insurance policy and possibly dictate if a different policy is called for.
Project Length: If the project is for your current home, will be completed within a definable timeframe, and occupied throughout the duration, then your home insurance policy may cover the work being done. You will want to confirm the amount of coverage is enough to rebuild your home in the event of a total loss once the project is complete. If not, you may need to increase the amount of coverage on your home.
If the remodel project will be done on a newly purchased home, it’s important to know how long the project will last and whether it will be occupied during the project. No home insurance company wants to write a policy on a home that’s being remodeled and vacant at the same time, unless it’s a very short project (less than 30 days) before you move into it. If the project will take 60 days or more, then a different kind of policy will be needed rather than home insurance
Occupancy: The underlying concern of most underwriters is whether the home will be lived in during the project. If not, then how long will it be vacant? The reason for their concern is that a vacant home is an inviting target to be burglarized or vandalized and home insurance companies prefer not to pay for claims if it can be avoided. Occupancy typically trumps the length of the project with home insurance underwriters.
Contractor: Who performs the work has become very important in the past year. Every underwriter wants to know whether the owner will act as the general contractor or working with a professional contractor. If you will be the contractor, underwriters want to know what experience you have in this type of project, whereas if you’re hiring a general contractor, they will want to confirm the GC has general liability insurance. This issue is more important when the project is referred to as a “vacant remodel project” which calls for a different insurance type of coverage than home insurance. I’ll address more of this next week when I outline alternatives to home insurance.
Based on my friend’s timeline, we made the decision to postpone starting a new policy until her project is complete which will be in about 45 days. What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!