Does Homeowners Insurance Cover Renovations? (What to Do Before You Start)

Article overview

• Renovations bring new risks: Standard policies may not cover damage, theft or injuries during remodeling.
• Review insurance before starting: Contact your agent to update coverage and fill any gaps.
• Confirm contractor insurance: Ensure your builder has liability and workers’ comp protection.
• Update your policy after work: Adjust limits and ask about discounts for safety improvements.

Home renovations often start with excitement — new finishes, better functionality and increased home value. But while homeowners focus on new design features, updated appliances or construction timelines, it's easy to forget an important detail: insurance.

Remodeling creates temporary conditions that can leave your home more vulnerable to damage and loss. For example, removing a roof or replacing windows can expose your home to rain, wind and debris.

Building materials and tools stored on-site may also attract theft, especially during longer projects. These risks are not always covered by a standard homeowners insurance policy, making it important to review temporary coverage options with your insurance provider.

Why home renovations change your insurance needs

While you might be focused on your home's potential increase in value, home renovations can also increase your replacement cost and liability risk.

Contacting your insurance agent before starting home renovations is a good way to ensure you are sufficiently covered. Ask your agent about items such as:

• Increased replacement cost after the work has been completed
• New liability risks due to the renovation or remodel changes
• Potential premium changes related to the final renovation

Here are some coverages you should review with your insurance agent:

• Dwelling coverage – This may need to be updated to cover new square footage added to your property.
• Personal property coverage – Ensure new appliances, electronics and other additions are sufficiently covered in case of loss.
• Liability coverage – Adding a swimming pool or fireplace can significantly increase your liability risk, necessitating an increase in your policy's liability coverage.

While some home improvements can result in a premium increase, others, such as installing a fire-resistant roof or updating old wiring, can lower your insurance costs.

Keeping your insurance agent up to date on improvements you are making to your home may also help ensure you are receiving appropriate discounts for added safety features, including alarm systems and smart home devices. 

Does homeowners insurance cover renovations?

Homeowners insurance may provide some coverage during renovations, but it doesn’t automatically cover every risk associated with remodeling. What’s protected may depend on the scope of the project, if permits are in place, and if your insurer has been notified before work begins.

• What is typically covered: In many cases, a standard homeowners policy may continue to cover your home during minor renovations. This may include protection against sudden and accidental damage, such as fire, certain types of water damage or storms while work is underway.

• What may not be covered: There are important gaps to be aware of during a renovation. Standard homeowners insurance typically does not cover:
  • Damage caused by poor workmanship or construction
  • Issues related to unpermitted or non-code-compliant work
  • Theft or damage to building materials not yet installed (in some cases)
  • Increased replacement costs if your coverage hasn’t been updated

To avoid unexpected gaps in your insurance coverage, it is important to speak with our home insurance provider before starting a renovation.

The hidden insurance risks of DIY renovations

Do-it-yourself home upgrades can be attractive to homeowners looking to save money. However, DIY work can introduce insurance complications if something goes wrong.

When you hire a licensed contractor to complete your home improvements, they are responsible for obtaining the proper permits and complying with building codes.

Renovations completed without proper permits may impact how claims are handled after a loss. If a loss, such as an electrical fire or water damage, is tied to unpermitted renovations, the insurer may deny coverage because the renovations did not comply with building codes.

There are also liability considerations when doing a DIY renovation. If a friend is injured while assisting with a project, homeowners could be financially responsible for medical costs or legal claims.

Finally, damage caused directly by renovation activities may not always be covered in the same way as sudden and accidental damage unrelated to construction.

Discussing this issue with your insurance agent before work starts will help you see the full picture and help protect yourself and your investment.

Contractor-related incidents are another consideration. Homeowners should ask any contractor doing work on their house to confirm that they carry liability insurance and workers' compensation coverage before any work begins. This may help reduce the homeowner's financial exposure in the event of accidental structural damage or worker injuries.

Larger projects may require additional coverage or endorsements, such as a dwelling-under-construction endorsement or builder's risk insurance. Your insurance agent can help you review these details to help ensure proper liability and personal property coverage during and after construction. 

What insurance do you need for home renovations?

• Builder’s risk insurance: Are you tackling a major renovation or building an entirely new addition? Builder’s risk insurance is designed specifically for homes under heavy construction. It steps in to cover damage to your structure and building materials while the work is in progress. This policy protects your investment from unexpected setbacks, including: 
  • Fire damage
  • Theft of expensive building materials
  • Vandalism on the job site
  • Severe weather events

• Dwelling under construction endorsement: For smaller updates, you usually do not need an entirely new policy. Instead, ask your insurance agent about a dwelling under construction endorsement. This handy add-on simply extends your current homeowners coverage to help protect your property while contractors are working. It is a cost-effective way to keep your home safe without the hassle of a separate policy.

• Vacant home insurance: Living in a construction zone is stressful, so you might decide to move out temporarily. However, leaving your home vacant may actually limit or even void your standard insurance coverage. Vacant home insurance steps in to protect your empty property against threats like theft, vandalism and unnoticed damage, such as a burst pipe.

Steps to take before you starting a renovation

Taking a few proactive steps before diving into construction can help ensure your project proceeds with fewer complications:

• Notify your insurer before work begins.
• Confirm contractor licensing and insurance coverage.
• Check for necessary codes and permits.
• Document improvements with photos and add any new personal property to your home inventory.
• Review and update your coverage limits after the project is finished. 

After the renovation: Updating your policy

The final reveal after renovation or remodel work is complete is the exciting part of the work and the money invested, but it’s important not to delay updating your homeowners insurance.

If your coverage doesn’t reflect your home’s new value, you risk being underinsured and may not get enough to rebuild after a loss. Help keep your home protected by taking these simple steps:

1. Recalculate your dwelling coverage
   Major upgrades, such as a new kitchen or added space, increase your rebuilding costs. Ask your insurer for an updated replacement cost estimate so your limits match your new home value.
2. Update your personal property
   New appliances or furniture from your renovation should be added to your coverage. Keep photos and receipts to make future claims easier and faster.
3. Ask about possible discounts
   Some improvements, like a new roof or security system, may qualify you for insurance discounts. Tell your agent if you’ve made these upgrades to potentially lower your premiums.
4. Review liability limits
   Features like pools may raise liability risks. Consider boosting your liability limits or getting umbrella coverage.
5. Schedule time with your insurance agent
   Connect with your insurance agent to review your policy. This helps ensure your coverage, discounts, and protection keep up with your improved home.

Renovate and remodel with confidence

It’s okay to be eager to start your renovation work, but remember to get your insurance coverage in check well before the first wall comes down or the first fixture goes in.

Taking time to confirm contractor insurance and document upgrades can help prevent costly surprises during and after construction. A quick conversation with your insurer can safeguard the time, money and effort you've put into improving your home.