Liv­ing smart:

Are you prop­erly in­sured for re­mod­el­ing

The Progress-Index - At Home - - FRONT PAGE - BY ANGIE HICKS

There are many topics more ex­cit­ing than home­own­ers in­sur­ance, I’ll grant you that. But since your house is likely to be your big­gest as­set, it’s wise to pe­ri­od­i­cally ex­am­ine cov­er­age, to en­sure that you’re ad­e­quately cov­ered against dam­age and li­a­bil­ity.

This is es­pe­cially im­por­tant if you’re plan­ning a ma­jor project, such as re­mod­el­ing, re­build­ing or build­ing new.

Any­time you hire a con­trac­tor to work on your home or prop­erty, take time to ver­ify that they and any sub­con­trac­tors are ap­pro­pri­ately in­sured, as well as li­censed and bonded. While it’s a good idea to ask for a con­trac­tor’s cer­tifi­cates of in­sur­ance, an even bet­ter prac­tice _ be­cause cer­tifi­cates can be faked or al­tered _ is to con­tact the in­sur­ers to con­firm cov­er­age. Some ex­perts rec­om­mend that con­trac­tors carry at least $1 mil­lion in cov­er­age for each in­sur­ance type.

Mean­while, highly rated in­sur­ance providers tell us that you should con­sider an ex­tra step: Get your­self named as an “ad­di­tional in­sured” on the con­trac­tor’s gen­eral li­a­bil­ity pol­icy. This en­sures you’re fully cov­ered against li­a­bil­ity for dam­age that can oc­cur dur­ing your project, such as work­ers break­ing a wa­ter line that causes a neigh­bor’s prop­erty to flood. Get­ting your­self added to the pol­icy may cost you lit­tle or noth­ing. Also, it means the in­surer will alert you if the con­trac­tor’s pol­icy lapses.

It’s im­por­tant to re­al­ize that some home im­prove­ments can af­fect your home­own­ers in­sur­ance pre­mium or cov­er­age. For ex­am­ple, a ma­jor kitchen re­model could mean that your home would cost more to re­place in case of dis­as­ter. Many poli­cies in­clude a re­place­ment cost en­dorse­ment that guar­an­tees suf­fi­cient cov­er­age to re­build your home. It’s a good idea to pe­ri­od­i­cally re­view your home­own­ers cov­er­age, to be sure you have re­place­ment cov­er­age and that the amount is in line with cur­rent costs.

Another ren­o­va­tion-re­lated in­sur­ance con­sid­er­a­tion arises if you trans­form an un­used room into a home of­fice. Stan­dard poli­cies rarely ex­tend cov­er­age for ac­ci­dents, theft or other haz­ards that can hap­pen on prop­erty used for busi­ness. If this is a con­cern, talk to your in­sur­ance com­pany about ex­tend­ing cov­er­age or buy­ing a sep­a­rate pol­icy.

It’s im­por­tant to in­form your agent or in­surer when you make sig­nif­i­cant changes to your home. Build­ing a pool, for ex­am­ple, is likely to raise your in­sur­ance rates be­cause it prob­a­bly will in­crease your li­a­bil­ity risk as well as your home’s re­place­ment cost. How­ever, some up­grades might re­duce pre­mi­ums. This can hap­pen if you im­prove an older home’s wiring, roof­ing or plumb­ing.

The typ­i­cal home­own­ers in­sur­ance pol­icy is not suf­fi­cient to cover risks as­so­ci­ated with build­ing or re­build­ing a home. Top-rated in­sur­ance ex­perts rec­om­mend that you take out a builder’s risk pol­icy to insure your prop­erty and on-site build­ing ma­te­ri­als dur­ing con­struc­tion.

For in­stance, if half of your house was de­stroyed, a typ­i­cal home­owner pol­icy will cover the in­tact half and a builder’s risk pol­icy would cover what’s be­ing re­built. Agents will base the builder’s risk pol­icy cost on build­ing plans and es­ti­mated con­struc­tion costs.

If you’re in the mar­ket for home­re­lated in­sur­ance, be sure to get quotes from sev­eral com­pa­nies that have good rat­ings from both con­sumers and from in­de­pen­dent rat­ing or­ga­ni­za­tions.

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