Renovating a New England home is a rite of passage. After months of noise, sawdust, and contractors coming in and out of your house, your kitchen gleams, your bathroom sparkles, or your dream addition has finally become reality. You’re finally done and ready to relax in your new and improved space.
There’s one more thing that many homeowners forget: it’s time to update your insurance policy, too. Upgrades can change your home’s replacement value, and if your homeowners insurance policy doesn’t keep pace, you could be left under insured if you ever have to file a claim.
Unfortunately, it’s all too common.
Are you ready to learn how to remodel your insurance policy as well as your home and protect your investment for years to come?
Let’s dive into why renovations create coverage gaps and how you can avoid them.
Topics Covered
How Home Remodels Create Hidden Coverage Gaps
Replacement costs keep rising
Renovations add value to your property and often increase your cost to rebuild. In New England, those costs are rising even faster than they are nationally.
Residential reconstruction costs jumped 63.7% nationwide between 2014 and 2024. New Hampshire led the country with a 7.66% increase between October 2023 and October 2024, while Maine, Massachusetts and other New England states saw 4%–5% increase.
Inflation, labor shortages, and supply‑chain issues are driving these costs. The Insurance Information Institute noted that replacement values of homes rose 13% in 2023 alone, and that’s without any renovations. That’s a huge increase that could leave you underinsured if you’re not careful.
When your home’s replacement cost rises and you haven’t adjusted your policy, you risk falling below the 80% rule. Most insurers will only pay your full replacement cost if you carry coverage equal to at least 80% of your home’s replacement value. If your dwelling coverage is below that threshold, the insurer will only reimburse your coverage amount, leaving you responsible for the rest.
Think of the 80% rule this way: the 80% rule is a penalty system, not a payout limit. To get a full payout for most smaller claims, your insurance company requires you to buy coverage equal to at least 80% of your home’s total rebuild cost.
- If you meet the rule: Your insurance will fully cover the cost of repairs for a partial loss, up to your policy limit. You only pay your deductible.
- If you don’t meet the rule: Your insurance company will only pay a portion of the repair costs. You will be responsible for the rest, plus your deductible.
The penalty is meant to stop homeowners from intentionally buying less insurance to save money on premiums.
Many homeowners fail to notify their insurer
One-third of homeowners don’t tell their insurer about upgrades.
Thirty-four percent of homeowners didn’t even know they needed to.
A 2023 home renovation survey by Hanover Insurance revealed these startling statistics, and they’re worth noting because failure to notify your insurance company can lead to denied or reduced claims.
But these scenarios are easily avoidable. Informing your agent about cost estimates, timelines and permits before starting work can ensure that your policy remains in good standing and that you’re protected through the process. Remodels change replacement cost coverage and liability risk, so homeowners need to update policies promptly.
Renovations introduce new risks and liabilities
Renovations come with risks. Major projects expose homes to theft, vandalism, construction accidents, and injuries. Unoccupied homes and large renovations increase risks such as unauthorized entry, theft of building supplies and contractor errors.
The addition of pools, hot tubs and decks increase liability exposure as they are considered “attractive nuisances.” Insurers often require fences, locked gates, or umbrella policies to help protect you from these risks. Some upgrades can actually lower your premiums, too! Upgrading electrical or plumbing can reduce fire and water damage risks. But adding square footage, high‑end finishes or a home office raises replacement value and often requires new endorsements.
6 Common Remodel Projects That Impact Coverage
Not every home improvement will affect your insurance, but many popular upgrades do. Here are the most common projects and how they may change your coverage:
- Kitchen and bathroom upgrades. Luxury finishes and high‑end appliances increase replacement cost and may exceed personal‑property limits.
- Home additions or finished basements/attics. Additional square footage nearly always increases premiums and may require coverage for uninhabited periods during construction.
- New roofs, windows, or siding. Upgraded roofs can lower premiums, especially when combined with impact‑resistant shingles or hurricane straps. New windows and siding often trigger discounts for improved wind or hail resilience.
- Pools, hot tubs, decks, and patios. Insurers treat pools as attractive nuisances, raising liability risk. Umbrella policies or increased liability limits are often needed.
- Electrical and plumbing updates. Bringing systems up to code reduces the risk of fire or water damage and can lower premiums.
- Solar panels and generators. Permanently attached roof‑mounted panels are often covered as part of the dwelling but detached or ground‑mounted systems may need an endorsement and can raise premiums if they significantly increase property value. Consider asking your agent whether your policy includes or excludes solar equipment.
Post‑Remodel Checklist: How to Protect Your Investment
Following a renovation, this checklist can help you make sure your homeowners insurance is up to date and reflects your upgraded property.
1. Document Your Upgrades
Keep dated photos, invoices, building permits and contractor receipts for all improvements. These records prove the scope and quality of your renovations. Without documentation, insurers may undervalue your upgrades when adjusting your dwelling limit or settling a claim.
2. Review Your Dwelling Coverage Limit
Your dwelling limit should equal at least 80% of your home’s updated replacement cost. Work with your agent or a local contractor to estimate what it would cost to rebuild using current materials and labor prices in New England. With reconstruction costs up nationally, you may find that your original limits no longer suffice. Update your policy to avoid being underinsured.
3. Ask About Ordinance or Law coverage
When you rebuild after a loss, you must comply with current building codes. In many standard policies, only the cost to replace damaged property as it was will be covered. Ordinance or Law endorsements pay for code‑mandated upgrades. Ask your agent about adding this coverage so you aren’t stuck paying for code compliance out‑of‑pocket.
4. Review Your Personal Property Coverage
If you upgraded appliances, furniture, or décor during your remodel, verify that your personal‑property limits are high enough. Standard policies may not value unique features like ornate woodwork or stained‑glass windows correctly unless you inform your agent. Inventory your belongings and update scheduled items accordingly.
5. Update Liability Protection
Additions that increase foot traffic like pools, hot tubs, decks, or rental units raise the likelihood of injuries on your property. Consider increasing your liability limits or purchasing an umbrella policy for additional protection.
6. Add Any New Structures to Your Policy
Detached garages, guesthouses, sheds, or studios are typically covered under “Other Structures,” but only if listed. Confirm that new structures built during your remodel are included at their current replacement value. Detached solar arrays or ground‑mounted generators may need separate endorsements.
7. Confirm Discounts and Credits Upgrades such as new wiring, plumbing, impact‑resistant roofing, and smart security systems reduce the likelihood of loss. Many insurers offer discounts for these improvements. For instance, roof upgrades designed to withstand extreme weather can lower premiums, and updated electrical or plumbing may reduce fire and water claims. Provide proof of the upgrades to your agent and ask about available credits.
Why New England Homeowners Should Act Now
New England faces unique challenges that make updating coverage essential:
- Rising reconstruction costs: The region has seen some of the highest increases in reconstruction costs in the country, which means replacement values can quickly outpace existing coverage.
- Supply‑chain and inflation pressures: National replacement values continue to be volatile due to inflation, labor costs, and supply‑chain disruptions, with New England states feeling the impact acutely.
- Stricter building codes: Rebuilding after a loss can be far more expensive than restoring the home as it was. Ordinance or law coverage is particularly important for older homes.
- Severe weather: New England winters bring nor’easters, ice storms, and heavy snow loads. Upgrading roofs and heating systems can reduce the risk of claims, but your insurer needs documentation to adjust premiums and limits accordingly.
Review Your Coverage Before the Next Storm
Renovating your home should be a cause for celebration, not a source of future financial worry. Before the next nor’easter or winter storm hits New England, take ten minutes to call your Co‑op Insurance agent. Discuss the improvements you’ve made, provide documentation and ask for a replacement‑cost recalculation. An updated policy ensures your newly remodeled home is fully protected and may even unlock discounts for safety upgrades. Your home has changed—make sure your policy does too.
Frequently Asked Questions (FAQ)
Q: I just replaced my roof. Do I need to tell my insurer?
Yes. A new roof improves your home’s resilience to wind and hail and often qualifies for premium discounts. Your insurer must update your dwelling limit to reflect the upgraded materials.
Q: I added solar panels—are they covered automatically?
It depends on how they are installed. Roof‑mounted panels are typically considered part of the dwelling and may be covered without an endorsement. Ground‑mounted or detached panels usually require additional coverage and could raise premiums. Always inform your agent about solar installations and ask whether you need an endorsement.
Q: What happens if I forget to update my policy after a remodel?
If your dwelling coverage falls below 80% of the home’s replacement value, your insurer may only reimburse a proportionate share of any claim. Undisclosed renovations can also void a policy or lead to denied claims. Keep your agent informed to avoid surprises.
Q: Do I need special insurance if I move out during renovations?
Standard homeowner policies are designed for occupied dwellings. If you vacate the home for more than 30 days during renovations, you may need a different policy (sometimes called a builder’s risk or vacant‑home endorsement). Check with your insurer before leaving your property unoccupied.
Need to learn more about homeowners insurance?
Our agents are ready to help, so contact us to learn how we can customize your insurance policies to meet your needs.
*Disclaimer: We offer content for informational purposes; Co-operative Insurance Companies may not provide all the services or products listed here. Please get in touch with your local agent to learn how we can help with your insurance needs.
Sources
AAA Northeast. 5 Common Home Updates and How They Impact Your Insurance. https://magazine.northeast.aaa.com/daily/money/types-of-home-updates-and-how-they-impact-your-insurance
Agency Checklists. New England Sees Significant Increases in Reconstruction Costs, Led by New Hampshire and Maine. https://agencychecklists.com/2025/02/24/a-10-year-surge-in-residential-commercial-reconstruction-costs-74566
Safety Northeast Insurance Agency. How Home Renovations and Your Insurance Affect Each Other. https://neinsure.com/how-home-renovations-and-your-insurance-affect-each-other
Investopedia. Understanding the 80% Rule in Home Insurance Coverage. https://www.investopedia.com/ask/answers/06/80percentrule.asp
Insurance Information Institute. Rising Homeowners Insurance Costs Since Pandemic Driven by Persistent Inflation, Replacement Cost Increases, Prolonged Supply Chain Issues, and Legal System Abuse. https://www.iii.org/press-release/rising-homeowners-insurance-costs-since-pandemic-driven-by-persistent-inflation-replacement-cost-increases-prolonged-supply-chain-issues-and-legal-system-abuse-071624
Noyes Hall & Allen Insurance. Why Updating Your Home Insurance Matters After Renovations. https://www.noyeshallallen.com/blog/why-updating-your-home-insurance-matters-after-renovations
The Hanover. The Hanover’s 2023 Home Renovation Report. https://www.hanover.com/hanovers-2023-home-renovation-report
The Zebra. Insurance Needs When You’re Renovating Your Home. https://www.thezebra.com/resources/home/home-renovation-insurance-needs