Your home may not be the same home you originally insured, and if your coverage hasn’t changed with it, you could face an expensive surprise after a claim.
Maybe you finished your basement, remodeled your kitchen, added a shed, installed solar panels or started using part of your home for business. Changes like these can affect what your home costs to rebuild, what you own, and the risks tied to how you use your property.
Your homeowners insurance policy was written to protect a particular home, its contents and the way you use it. When those things change, your insurance needs may change too.
That’s especially worth paying attention to now. Homeowners replacement costs have risen nearly 30% over the past five years, driven by higher construction costs, supply-chain disruptions and labor shortages.
That means rebuilding the same house after a major loss can cost substantially more today than it did just a few years ago. Add a finished basement, remodeled kitchen, new addition or other major changes, and your coverage needs can drift even further from the home you actually have.
While you can’t control everything affecting the homeowners insurance market, you can make sure your agent knows when your home, belongings or the way you use your property has changed.
Topics Covered
7 Changes That Could Affect Your Coverage
1. You Renovated, Expanded or Finished Part of Your Home
A major home improvement can change more than your living space. It may also change what it costs to rebuild your home after a covered loss.
Think about what happens when you turn an unfinished basement into a family room. You may add:
- Drywall
- Flooring
- Lighting
- Electrical work
- Plumbing
- Built-in cabinets
- Bathroom
- Furniture
- Electronics.
A kitchen remodel could add new cabinets, countertops, appliances and higher-end finishes. An addition can increase your home’s total square footage.
Those improvements may not be reflected in the information your insurer had when your policy was originally written. Square footage, the number of rooms and bathrooms, special features and renovations can significantly increase rebuilding costs.
What to do: Tell your insurance agent about major renovations, additions or newly finished spaces. For a substantial project, consider having the conversation before construction begins and then reviewing your coverage again when the project is finished.
2. You Added a Shed, Garage or Other Structure
Your house may not be the only structure on your property. Maybe you’ve added a:
- Detached garage
- Storage shed
- Workshop
- Gazebo
- Barn or other outbuilding
Homeowners policies commonly include coverage for certain structures that aren’t attached to your house, but the amount and type of coverage depend on your policy. The value and use of a structure can also make a difference. Garages, sheds and other structures can affect home rebuilding-cost calculations.
There’s also a practical difference between a small shed holding garden tools and a detached workshop containing thousands of dollars in equipment.
What to do: Let your agent know what you’ve built, approximately what it cost and how you use it. Ask whether your current policy provides appropriate coverage for the structure and anything stored inside it.
3. You Installed Solar Panels or Other Significant Home Equipment
Solar panels and other major home systems can change the value and characteristics of your property.
Homeowners considering solar panels should speak with their insurance agent before installation because policies differ in how these additions are treated. Solar panels may affect insurance costs or create additional insurance considerations.
Similar conversations may be worthwhile when adding other significant equipment or systems to your home, such as a permanently installed generator or substantial energy upgrades.
What to do: Before installing an expensive home system, ask your agent how it would be treated under your policy. After installation, provide any information your insurer needs and confirm that your coverage still reflects the property you now own.
Pro Tip: If your solar panels or other equipment are leased rather than owned, review your contract as well. The agreement may spell out which responsibilities belong to you and which belong to the equipment provider.
4. You Bought Expensive Valuables or Accumulated More Personal Property
Over time, the things you own can add up, and so can their value. Over several years, you might acquire:
- Jewelry
- Artwork
- Collectibles
- High-end electronics
- Musical instruments
- Family heirlooms
- Expensive hobby or recreational equipment
Homeowners insurance generally includes personal property coverage, but certain categories of valuables can have specific coverage limits.
It’s a good idea to review your policy when you acquire valuable jewelry, antiques or artwork since standard homeowners policies may place limits on these items.
Any major purchase is a good reason to ask whether your policy provides enough coverage for the specific things you own.
What to do: Keep receipts, photographs and appraisals when appropriate. Ask your agent whether any valuable belongings have special limits under your policy or should be insured differently.
5. You’re Renting Out a Room or Part of Your Home
Turning part of your home into a rental can change how your property is being used and have important insurance implications.
There’s a significant difference between:
- Occasionally renting your home for a weekend
- Regularly offering a room through a home-sharing platform
- Having a long-term tenant
- Moving out and converting your former residence into a rental property
For example, a homeowners policy written for a single-family residence may be affected if your home is subsequently used as a rental, and your homeowners policy may not be designed to cover accidents arising from rental activity.
Notify your insurer before renting your property since different arrangements can require different coverage. Don’t assume that protection offered through a rental or home-sharing platform makes your homeowners insurance irrelevant. The coverage can be different, with different limits, conditions and exclusions.
What to do: Talk to your insurance agent before listing your property or accepting a tenant. Explain how often you plan to rent it, whether you’re renting a room or the entire property and whether the arrangement will be short- or long-term.
6. You Started Running a Home Business
Working from home and running a business from home aren’t necessarily the same insurance exposure.
If you work remotely for an employer, your home may simply contain a desk, laptop and other ordinary office equipment. But an actual home-based business could involve:
- Customers or clients visiting your home
- Inventory stored in your garage or basement
- Specialized tools or equipment
- Employees working at the property
- Products being manufactured, prepared or sold from home
- Regular deliveries from suppliers
Those activities can create property and liability exposures that weren’t considered when your homeowners policy was written.
A standard homeowners policy may or may not cover certain business-related liabilities.
What to do: Tell your agent what your business actually involves. Don’t stop at saying, “I work from home.” Explain whether you have customers, inventory, expensive equipment, employees or other business activity at your property so your agent can evaluate your specific situation.
7. You Added Something That Changes Your Property’s Liability Risk
Some home improvements don’t necessarily add significant living space, but they can change the likelihood that someone could be injured on your property.
Common examples include:
- Swimming pools
- Hot tubs
- Trampolines
- Certain playground or recreational equipment
Homeowners need to discuss these purchases with their insurance agent because these types of recreational features can affect liability coverage and how an insurer evaluates your property. Homeowners insurance isn’t only about repairing your house or replacing belongings. Liability protection is another major part of your policy.
What to do: Before installing a major recreational feature, ask your agent how your policy treats it, whether your existing liability limits remain appropriate and whether your insurer has any safety or eligibility requirements.
Update Your Home Inventory While You’re at It
If you’re already reviewing changes to your home, it’s a good time to update your home inventory too.
A home inventory creates a record of what you own and can help you evaluate whether your personal property coverage still matches your belongings. Consider documenting your home room by room and including:
- Photos or video
- Major purchases
- Model and serial numbers when practical
- Receipts
- Appraisals for appropriate valuables
- Newly purchased furniture, electronics and equipment
Keep your inventory somewhere you can access it even if your home is damaged.
Related Resources
- Remodeling Your Home? Better Check Your Insurance Coverage
Planning a renovation or addition? Learn why major home improvements are a good reason to review your homeowners insurance coverage. - Homeowners Insurance Gaps You Didn’t Know You Had (But Should Fix Today)
Discover several easy-to-overlook coverage gaps that could leave you more exposed than you realize. - Will Your Homeowners Insurance Cover a Disaster? Maybe…
Learn how rising rebuilding costs, renovations and other changes can affect whether your current coverage is enough after a major loss. - What Homeowners Insurance Doesn’t Cover … And Why That Matters
Find out why understanding exclusions and limitations before a claim can help you avoid costly surprises later.
Your Home Changes. Your Insurance Should Keep Up.
When your home, belongings or how you use your property changes, your insurance may need to change too.
Talk with your local Co-operative Insurance agent to make sure your coverage still reflects the home you have today.
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
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https://content.naic.org/article/naic-releases-first-its-kind-national-analysis-homeowners-insurance-market-trends
National Association of Insurance Commissioners. Consumer Homeowners.
https://content.naic.org/consumer/homeowners-insurance.htm
National Association of Insurance Commissioners. Is it Time to Review Your Policies?
https://content.naic.org/article/consumer-insight-it-time-review-your-policies
National Association of Insurance Commissioners. Renting Out Your Home? You Need Insurance Coverage for Home-Sharing Rentals.
https://content.naic.org/article/consumer-insight-renting-out-your-home-you-need-insurance-coverage-home-sharing-rentals
National Association of Insurance Commissioners. Working from Home & Your Insurance Coverage.
https://content.naic.org/article/consumer-insight-working-home-your-insurance-coverage
National Association of Insurance Commissioners. Homeowners and Renters Insurance.
https://content.naic.org/article/consumer-insight-homeowners-and-renters-insurance
Insurance Information Institute. How Much Homeowners Insurance Do I Need?
https://www.iii.org/article/how-much-homeowners-insurance-do-i-need
Insurance Information Institute. Inflation, Replacement Costs, Climate Losses Shape Homeowners’ Insurance Options. https://www.iii.org/blog/inflation-replacement-costs-climate-losses-shape-homeowners-insurance-options
Insurance Information Institute. Insuring Your Home-based Business.
https://www.iii.org/article/insuring-your-home-based-business
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https://www.iii.org/article/coverage-for-renting-out-your-home
Triple-I. Trends and Insights: Homeowners Insurance.https://www.iii.org/sites/default/files/docs/pdf/triple-i_trends_and_insights_homeowners_insurance_rates_07092024.pdf