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The Effect of Home Improvements on Your Insurance Premiums
by
JG Wentworth
•
March 4, 2025
•
3 min
Home improvements can be exciting, revitalizing your living space and potentially increasing your property’s market value. However, they can also have a significant impact on your homeowners insurance premiums. Whether you’re planning a major renovation or some minor upgrades, it’s important to understand how these changes can affect your insurance costs.*
Understanding Homeowners Insurance
Homeowners insurance is designed to protect your home and possessions against damage or loss. It typically covers risks like fire, theft, and natural disasters. Premiums are determined based on the risk profile of the home, which includes factors such as the home’s value, location, construction materials, and the owner’s claims history.
Impact of Home Improvements on Insurance Premiums
1. Increasing Replacement Costs
Major renovations, such as adding a room or upgrading your kitchen, can increase the replacement value of your home. This is because the cost to rebuild your home in case of total loss would now be higher. Insurers may raise your premiums to reflect this increased risk.
2. Improving Home Safety
Conversely, improvements that enhance the safety and structural integrity of your home can lead to lower premiums. For example, upgrading your electrical system or installing a new roof can reduce the risk of fire or water damage, making your home safer and potentially lowering insurance costs.
3. Adding Liability Risks
Certain additions like a swimming pool or a trampoline can increase your liability risk. These features are considered attractive nuisances and can lead to higher insurance premiums due to the increased chance of injury-related claims.
Compare Home Insurance Quotes
Compare Home Insurance Quotes
Tips for Managing Insurance Costs with Home Improvements
Notify Your Insurer
Before starting any major renovations, it’s crucial to notify your insurance provider. Some improvements require an update to your policy to ensure coverage continues without interruption.
Shop Around
If your home improvements significantly change the coverage you need, it may be a good time to shop around for a new policy. Comparing offers from multiple insurers can help you find the best rate for your newly upgraded home.
Consider Long-term Savings
Some upgrades, while expensive upfront, can lead to long-term savings on your insurance premiums. For example, installing storm shutters or a more robust security system can reduce your premiums and improve your home’s security.
Conclusion
Home improvements can significantly affect your insurance premiums, but the exact impact depends on the nature of the renovations. By understanding these changes, you can make informed decisions that balance your desires for a beautiful home with the practicalities of insurance costs and coverage needs.
By taking proactive steps and working closely with your insurer, you can ensure that your home is protected at all times, even as it evolves and improves.
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*Any information provided on this site is for educational purposes only. JGW Connects, LLC is not an agent of you or any third party advertiser on this website. You should rely on your own judgement in deciding which available product, terms and provider that best suits your personal financial requirements. We do not offer financial advice, advisory or brokerage services. We recommend that you consult with our own independent advisors regarding these products and services
JGW Connects, LLC is an independent, advertising-supported comparison site and marketing lead generator and does not play a role in decisioning for any of the third party products advertised on this webpage. JGW Connects, LLC and the JG Wentworth Company family of companies are not affiliated with the companies advertising on this webpage. You are not charged for our services. JGW Connects, LLC may receive a referral fee or other affiliate fee for connecting you with these third-party companies or upon you contracting with a third-party company. We do not make any guarantees that these are the only providers in the marketplace, or that their products or services will meet your needs. The products and services presented to you may or may not be the best, or only options, available.
JGW Connects does not provide any of the products or services advertised and does not make any decisions regarding your eligibility for those products or services. All decisions regarding approval or denial of a particular product or service are the responsibility of the participating company and will vary based upon your particular financial situation, and criteria determined by the company to whom you are matched. Not all consumers will qualify for the advertised rates and terms.