Renovating your home is a great way to increase its value and your enjoyment of the space. We spend our lives in our homes and try to make them the best version they can be

Before remodeling, consider the effect of your renovations on your homeowners’ insurance premiums. Some factors may even affect your ability to file a claim if something disastrous were to happen after your renovation.

Keep reading to find out how various renovations might impact your homeowners’ insurance coverage.

Square Footage

If your home upgrade project adds square footage to your home, you’ll need to update your insurance policy. Adding space to your home increases the cost of rebuilding. Homeowners’ insurance should adequately cover rebuild costs in the event of a total loss. An addition also increases your home’s market value and replacement value. 

Properly determine your home’s square footage to inform your insurance agent of the change with confidence. Ask your insurance broker to advise you on suitable coverage limits to prevent underinsurance post-project completion. When adding square footage, ask for a comprehensive review of coverage limits and discuss the impact on dwelling and liability coverage with your insurer.


Custom structures like building mother-in-law units and adding exterior decks upgrade your property. Additions like these require changes to your policy’s dwelling coverage and liability limits.

Let your insurance agent know about customized additions before they are built. Providing details like square footage, materials, and intended use will allow accurate valuation for insurance purposes.

Building Materials

Luxury building materials increase the repair or rebuild cost of a covered loss. High-quality building materials like porcelain tile cost more to cover than standard materials and can raise replacement value.

Using high-grade materials is a smart investment but also increases insurance costs.

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Keep receipts of materials to prove costs for your insurance agent. Documentation is key for proper reimbursement.

Household Items

Personal property coverage extends to possessions inside your home. When renovating, take stock of the items you are adding. Costly appliances, fixtures, and furniture increase value.

Review replacement cost versus actual cash value coverage with your agent. Replacement cost pays the full replacement amount. Actual cash value pays the depreciated value. For expensive upgrades, replacement value is often better despite the higher premium.

Liability Coverage

Upgrades like a pool or hot tub can be fun but also invite risks for you and your guests. Purchase proper liability coverage in case of injury.

Pools, trampolines, and large dogs boost liability protection needs. Pay attention to attractive upgrades that could draw neighborhood children onto your property.

Meet with your insurer when adding exposure. Your agent can review liability limits and advise if an umbrella policy is prudent. An umbrella policy provides additional protection if a lawsuit exceeds your homeowners’ policy limit.


A new roof can lower your insurance premiums. Thanks to seasonal changes, your roof deals with wear and tear and needs inspection every few years.

Consult your roofer beforehand about damage-resistant materials. A metal roof is a durable option that lasts for decades. 

By replacing your roof with impact-resistant materials, you may qualify for insurance discounts. Tile, metal, and fiberglass withstand damage better than asphalt shingles. Document your new roof and notify your insurer to maximize savings.

Plumbing and Electrical

Updating electrical wiring and plumbing systems is a great way to reduce premiums. Old systems are common causes of home insurance claims. Updating reduces risks. Faulty wiring and leaky plumbing cause water damage. Home upgrades improve safety and prevent losses.

Document upgrades with your insurer, as safer plumbing and electrical systems typically mean lower premiums. Schedule full inspections by professionals to identify hidden issues.

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So, Is Renovating Worth The Insurance Rate Increase?

Home renovations often increase homeowners insurance rates, however, upgrades significantly improve your quality of life and property value. Consider focusing on renovations that improve safety, like a new roof and updated electrical and plumbing. Safety projects sometimes qualify for discounts to offset some of the added premium costs.

Some investments, like luxury finishes or additions, will increase your home’s value over time more than the amount of insurance premium increases. Having been a real estate agent for over 20 years, I know that maintaining proper coverage is essential. Work collaboratively with your insurance agent to make informed trade-off decisions. With planning and communication, renovations can enhance your property and have a low impact on insurance costs.

FAQs About Home Renovation Insurance

What is a typical increase in insurance rates from renovations?

The increase depends on the specifics of your project. Simple kitchen or bathroom updates may only cause a minimal rise in your premiums. A major addition could increase rates more. Reach out to your insurance agent for quotes tailored to your specific renovation plans.

When is the best time to notify my insurer about renovations?

Alert your insurance company about renovations before major construction work begins. Provide your agent with relevant details and projected timelines for the renovation. Purchase adequate coverage as soon as the project begins.

What records should I keep about renovations for insurance purposes?

Maintain all receipts for renovation materials and costs, including items like luxury flooring and fixtures. Take photos or videos of the project. Keep detailed documentation of all upgrades.

Can renovations qualify my home for insurance discounts?

Yes, some upgrades like impact-resistant roofing, updating older plumbing or electrical systems, or adding storm shutters may qualify you for premium discounts. Check with your agent about what kinds of renovations in your area qualify for premium reductions.

How should I insure expensive new possessions added during renovations?

Think carefully about whether replacement cost or actual cash value coverage makes more sense for upgrades like high-end appliances, custom cabinets, or luxury furniture. Replacement cost coverage pays the full amount to replace items if they are damaged. Actual cash value pays the depreciated value. I recommend replacement cost coverage for very costly upgrades despite the higher premiums.

Editorial Contributors
avatar for Laurie Engle

Laurie Engle

Expert Writer & Reviewer

Laurie Engle is a freelance writer who provides insights to homeowners on topics such as the home warranty industry, relocation issues, and real estate trends. As a licensed Realtor since 2001 Laurie has acquired extensive expertise in dealing with home warranty companies and navigating the intricacies of the real estate market. In addition to her commitment to helping clients with their home buying and selling needs, she maintains a sharp awareness of market dynamics, including property values, interest rates, and local regulations.

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Casey Daniel

Casey Daniel is a writer and editor with a passion for empowering readers to improve their homes and their lives. She has written and reviewed content across multiple topics, including home improvement, lawn and garden care, sustainability, and health and wellness. When she’s not reviewing articles, Casey is usually playing board games, repainting her bathroom, or quilting.

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