7 Things That Raise Homeowners Insurance Rates


Before you make renovation plans, consider how the upgrades will affect your homeowners insurance premiums.


Renovating your home is a great way to increase your home’s value and your sense of well-being.

We spend a large portion of our lives in our homes, so why not try to make yours the best version it can be?

But first, consider the effect on your homeowners insurance premiums.
Many factors can affect your ability to smoothly file a claim if something disastrous were to happen after your home renovation.

Consider this:

Room Addition
Adding onto your home may be a necessity, or a luxury, but one thing is certain: it will make your homeowners insurance rates increase. (DepositPhotos)

1. Square Footage

Many home upgrade projects add square footage to your home. Since part of your policy covers the square footage, any upgrade will require a policy update. This will prevent your homeowners insurance from covering less than the market value.

See how to determine the square footage of your house here.

2. Customization

Adding a mother-in-law unit or a new deck creates factors to cover under the policy.

Your insurer will need to know about these kinds of upgrades to make sure your policy reflects the change.

And you need to tell your agent before the project even begins — to ensure it’s able to be covered.

designer bathroom
If you want a designer’s bathroom, expect to pay premium prices — both for building materials and rates to ensure them. (DepositPhotos)

3. Building Materials

High-quality building materials — for instance, porcelain tiles as opposed to vinyl sheet flooring — cost more to cover than standard materials. They can raise your home’s replacement value.

So keep receipts of materials used; this will make it easy to prove the costs for your insurance agent.


4. Household items

Adding new appliances, fixtures or other items will definitely add to the value of your home. How you decide to insure those items will determine the cost of your premium increase.

Two factors you should know about here are actual cash value and replacement cost.

Actual cash value is the cost of the item minus current market depreciation. If you have a stove that cost $600 two years ago that is now valued at $400, the payout from your agency would be $400.

Replacement value, on the other hand, would pay out the full $600. While this is a good deal, this level of protection also increases the cost of your premium. If your project is on the low end, you can save on your premium with actual cash value coverage. If it’s toward the high end, you’re better off going with replacement cost value.

If you want to understand how much your household items are worth, related to your insurance coverage, take an inventory of your possessions.

Just in case something were to happen to your home, your insurance company will be able to quickly produce the claim.

Not everyone wants a pool in their backyard, so this addition alone may not help your home’s value. But the added liability will make your homeowners insurance rates increase.

5. Liability Coverage

Home upgrades like a pool or hot tub can bring a lot of fun, but they also invite additional risks for you and your guests.

Make sure you have the right amount of liability coverage in case of an injury.

A metal roof is more durable than asphalt shingles and provides peace of mind during hurricane season.

6. Roofing

Putting on a new roof is a great way to save on premiums. With changing of the seasons, your roof deals with a lot of wear and tear, and needs to be checked on every few years.

Consult your roofing company beforehand; it can recommend the most damage-resistant materials. A durable option that will last for decades is a metal roof.

Water leaks can contribute to structural damage — and higher homeowners insurance rates. Get a plumber to take care of any small issues before they become big liabilities.

7. Plumbing and Electrical

A home upgrade is an excellent time to update electrical wiring and plumbing systems. Old plumbing and electrical systems are the prime causes of home insurance claims.

Upgrading these systems, on top of reducing risks, can save you 10 percent on your annual insurance premiums.

Further Reading

Policygenius: Home Insurance Shoppers’ Guide


  1. I am watching your S20/Ep23 program on making a better backyard. I currently have a backyard that has become overgrown by unwanted trees. Do you have any suggestions on how I can remove trees without them returning at a future date? I am also overwhelmed with wild blackberry canes that grow naturally in my area (WA State).


    Kathleen Marcucci

  2. Great article and much appreciated as I’m in the insurance industry and many people don’t know to call their agent when change are made to their home. All policies have a co-insurance clause built in which if you are underinsured then for every percentage you are underinsured that same percentage will be taken off your claim check. Most agents don’t bother to explain this nor do they do a proper and thorough cost estimator on the home to determine rebuild value at binding. This can have severe repercussion to the insured so although we all want low premiums what’s the point of even paying a dollar if your not properly insured.

  3. “Putting on a new roof is a great way to save on premiums. With changing of the seasons, your roof deals with a lot of wear and tear, and needs to be checked on every few years.” Simple thing but this never really crossed my mind until now.


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