Remodeling To Add Value To A Home Bay Require Additional Insurance
Remodeling a home is an exciting and challenging project. A person has to work hard in order to choose the right materials and to make sure they are pleased with the results. However, a homeowners insurance policy could need a facelift as well whenever a homeowner: renovates their bathroom, finishes their basement, or adds a deck.
While it may not initially be realized, many factors affect the value of a home. Renovations or improvements made to the property can increase the value significantly:
Adding or renovating a bathroom can increase the Replacement Cost over $9,000
Finishing a basement can increase the Replacement Cost on average over $10,000
Adding a deck and French doors can increase the value over $14,000
Many policyholders arent even aware they need to notify their insurer regarding home improvements. In fact, only about 59% of policyholders notify their insurer of major home improvements affecting coverage.
Make sure the current coverage is adequate
Many people only insure their homes for the amount it would cost to replace it based on market value. This generally is not enough coverage to repair or replace a home to its previous condition in the event of a loss. Regularly updating the replacement cost of a home with an insurer is the best way to make sure the homeowner's insurance policy will provide adequate protection in the event of a loss.
There are several factors to consider:
1.Replacing a home often involves far more labor and materials than building a new home.
2.Making repairs around an existing structure can increase the cost.
3.Custom repair and altering construction to meet existing building codes is often more costly than new construction.
4.The increasing cost of materials and labor also has a significant effect on the replacement cost of a home.
Replacement cost should cover the cost to rebuild
It is recommended that a dwelling be insured for 100% of replacement cost so that if there is a total loss, there will be enough insurance to rebuild the house. If the policy limit is less than 100% replacement cost and there is a total loss, a homeowner runs the risk of not having enough money to replace their old home with one of equal size and quality.
Make sure this valuable investment is adequately protected. Review the value of the house annually, or if improvements have been made to a home, contact an independent agent and request a replacement cost estimate.