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Renovating your house? Check your homeowner’s policy

With summer almost here, many Lehigh Valley homeowners will begin scheduling home renovation projects. Remember to also schedule time for these questions regarding your homeowner’s insurance before beginning your project:

Will you vacate your home when remodeling occurs? This question is important because many homeowner’s policies are designed to insure “owner occupied homes.” 

“Residence premises” is an example of language that can be used to deny claims for damages sustained in an unoccupied home. Some insurers define residence premises as “the one family unit where you reside.” If you and your family vacate the premises during the construction period, it stands to reason you do not reside there at that time. As a result, your insurance carrier may deny coverage following what you thought would have been an insurable event.

What is the rationale? Major renovation projects requiring you and your family to move out of your home significantly increase risk to your home. For example, a worker using a blowtorch could set fire to your home. A worker who was scrolling through his mobile device rather than listening to the foreman’s instructions could demolish a load-bearing wall. These and other additional risks increase costs to insurers from claims.

To protect the value of what is likely to be your most valuable asset during a major construction project, contact your trusted insurance broker before construction begins to consider these and other alternate risk transference options: 

Renovation Coverage. Renovation coverage protects building materials situated on your property. It also protects them while they’re being stored or delivered to your home. With this coverage, you can recover the cost to replace damaged or stolen materials.

Builders Risk Insurance. If renovation coverage is not available, a Builders Risk policy can be designed to cover your property during the construction period. This includes property at the construction site, as well as property held at off-site storage locations and in transit. 

Your trusted broker can advise you regarding the best course of action for your particular situation.

Will you need to take steps to maintain insurance coverage during the course of your renovation project? Neither you nor your trusted broker wishes to file a claim. By asking your broker this question before construction begins, you can both ensure your claim is covered following an insurable event and help to reduce your exposure to risk while your renovation project is underway.

Here are other things to consider:

  • Obtain a certificate of insurance from the general contractor listing you the homeowner as an additional insured.
  • Determine the general contractor’s coverage is at least $1 million per occurrence.
  • Place one Underwriting Laboratories rated fire extinguisher for every 1,000 square feet.
  • Post “No Smoking” signs throughout that part of your home under construction.
  • Prevent unauthorized entry to the construction site with a driveway chain or temporary perimeter fencing. 
  • Install a remote surveillance system.
  • Add a temporary burglar and fire alarm system.
  • Conduct rigorous before and after inspections of your home, taking notes both for reference and documentation.

As in many things, timely full disclosure is the best course of action prior to initiating a home renovation project. By contacting your trusted insurance broker, you can both reduce and transfer your risk.

Tom Kueny is a partner at KMRD Partners, Inc., a risk and human capital management consulting and insurance brokerage firm, concentrating on the Lehigh Valley. Tom can be reached at tkueny@kmrdpartners.com

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