Spring and summer are peak renovation season across Central Illinois. Whether you're finishing a basement, adding a deck, updating a kitchen, or building a detached garage, home improvement projects can significantly increase the value of your property, and that's a good thing.
But here's what many homeowners overlook: if your home's value goes up and your insurance coverage stays the same, you could be underinsured. A renovation that isn't reflected in your homeowners policy can leave you exposed to serious financial risk if something goes wrong.
Before the contractors arrive, it's worth having a conversation with your insurance agent.
Why Renovations Affect Your Homeowners Insurance
Your homeowners insurance policy is built around the estimated cost to rebuild your home. When you invest in upgrades... new square footage, higher-end materials, updated electrical or plumbing. That rebuild cost changes. If your policy doesn't reflect those changes, you may not have enough coverage to fully restore your home after a covered loss.
This isn't just about major additions. Even mid-range projects like a kitchen remodel or bathroom renovation can meaningfully shift your home's replacement value.
Coverage Gaps to Watch For
Renovations can create coverage gaps in several ways. Understanding where these gaps tend to appear is the first step toward avoiding them.
Dwelling Coverage Limits
Dwelling coverage is the core of your homeowners policy. It pays to rebuild or repair your home after a covered event like a fire or severe weather damage. If you've added a room, upgraded your roof, or installed custom features, your dwelling coverage limit may no longer be sufficient. Reviewing this limit with your agent after any significant project is essential.
Personal Property Coverage
A renovation often comes with new furnishings, appliances, or equipment. If the total value of your belongings has increased, your personal property coverage should reflect that. High-value items like custom cabinetry, built-in appliances, or home theater systems may require a scheduled personal property endorsement for full protection.
Liability Protection
Construction projects introduce new risks. Open excavation, exposed wiring, building materials stored in the yard — all of these can create hazards for visitors, neighbors, or even delivery personnel. Your homeowners liability coverage protects you if someone is injured on your property, but it's important to verify that your limits are adequate during and after a renovation.
Builder's Risk and Contractor Considerations
During the construction phase itself, your standard homeowners policy may not cover damage to the work in progress. Depending on the scope of the project, you may need a builder's risk policy or an endorsement to your existing policy. It's also important to confirm that your contractor carries their own insurance — including general liability and workers' compensation — so that you aren't held liable for injuries or accidents on the job site.
Common Renovation Projects and Their Insurance Implications
Different types of projects carry different insurance considerations. Here are a few of the most common.
Adding a Deck or Patio
Outdoor living spaces are one of the most popular home improvements. A new deck increases your property's value and your rebuild cost. It can also increase liability exposure, especially if the space includes features like a hot tub, fire pit, or outdoor kitchen. Make sure your policy reflects the addition and that your liability limits account for the increased foot traffic.
Finishing a Basement
A finished basement adds usable square footage and often includes electrical, plumbing, and HVAC upgrades. This type of project can significantly raise your dwelling coverage needs. If you plan to use the space as a rental unit or home office, additional coverage considerations may apply.
Kitchen and Bathroom Remodels
Even without adding square footage, upgrading materials and fixtures can increase your home's replacement cost. Custom countertops, high-end appliances, and premium tile work all factor into what it would cost to rebuild, and your coverage should keep pace.
Detached Structures
If your project involves a new garage, workshop, or shed, your policy's "other structures" coverage comes into play. This is typically set at a percentage of your dwelling coverage. A significant addition may require an adjustment to ensure the new structure is fully covered.
Steps to Take Before and After a Renovation
Protecting your investment doesn't have to be complicated. A few straightforward steps can help ensure your coverage stays aligned with your home's value.
Before the project begins, contact your insurance agent to discuss the scope of the work. Ask whether your current policy provides adequate protection during construction and whether any temporary endorsements are needed.
During the project, keep detailed records of the work being done, including receipts, contracts, and photographs. These records are valuable if you ever need to file a claim.
After the project is complete, schedule a policy review with your agent. Update your dwelling coverage limits, add any new high-value items to your personal property coverage, and reassess your liability protection.
Talk to a Loman-Ray Agent
Home improvements are an investment in your property and your quality of life. Making sure your homeowners insurance keeps up with those improvements is an important part of protecting that investment.
At Loman-Ray Insurance Group, we help homeowners across Central Illinois evaluate their coverage, identify potential gaps, and build policies that reflect the true value of their homes. Whether you're planning a small update or a major addition, our agents are here to help you stay fully covered.
Contact your local Loman-Ray office to schedule a homeowners insurance review before your next renovation project gets underway.
