Does remodeling your home affect your insurance?

Thinking about finishing your basement, replacing your roof, or installing a swimming pool? Home upgrades can be exciting—and they can change what you need from your homeowners insurance.

A quick heads-up: Before your project starts or as soon as plans are firm, talk to your agent. They can help you assess whether your coverage is keeping pace with your renovations.

Why does upgrading your home affect your insurance?

In most cases, remodeling increases your home’s value. More importantly, it can increase what it would cost to rebuild or replace your home after a covered loss.

Let’s say you spend $30,000 updating your kitchen with granite countertops, custom cabinets, and new appliances. If your house is destroyed in a fire—and your dwelling limit is still based on the previous kitchen with laminate countertops, generic cabinets, and old appliances—your coverage might not be enough to rebuild the home as it is today. 

What kinds of upgrades affect your home insurance?

Many improvements can change your coverage needs, your risk profile, or both. Here are a few common ones:

1. Finishing your basement

Turning a basement into living space can mean more property and structure to protect. So, let your insurance company know about your addition in order to get the proper coverage amount in place.

Tip: Consider whether adding water backup and sump pump failure coverage makes sense for your finished basement. Water that backs up through sewers or drains, or overflow from a sump pump, is often not covered unless your policy includes this type of endorsement. If you’ve added carpet, furniture, and electronics downstairs, check your policy to see if it’s protected.

2. Remodeling the kitchen

Kitchen renovations are popular for a reason—they can make a big difference in how you use your home. They can also be one of the priciest updates you’ll make.

What to do: Let your insurance company know what upgrades you made so they can help confirm whether your home’s replacement cost is still on track and your coverage reflects your home today.

3. Getting a new roof

Roof age and condition often factor into home insurance pricing. A new roof may affect your rate, and depending on your policy, state, and roof materials, it may help you lower your premium.

Two things to ask about:

• Impact-resistant roofing discounts. Depending on your state and policy, using impact-resistant roofing materials could help you save on your homeowners insurance while adding extra protection.
• Replacement cost (RCV) vs. actual cash value (ACV). If your roof is damaged by a covered event like wind, snow, or hail, RCV generally helps pay to replace the roof with materials of similar kind and quality. ACV takes into account the roof’s age and condition, paying only what your roof is worth today.

Learn more about replacement cost vs. actual cash value coverage.

4. Installing a pool

A swimming pool can be a great addition—and it can also increase liability risk.

What to do: Tell your agent before it’s installed. You may need to review:

• Liability limits and whether an umbrella policy makes sense
• Any safety requirements that could apply, such as fencing, locked gates, diving boards, and slides.

Learn more about insurance considerations for swimming pools.

5. Adding a home office

Working from home is common. But if you’re running a business out of your home—whether it’s selling products, storing inventory, or seeing clients—your homeowners policy may not cover everything you assume it does.

Tip: Ask your agent whether home business coverage may be available and whether it fits your business activities.

Learn more about small home business coverage.

Does home insurance cover in-progress renovations?

It depends. Renovation work can create special risks, from stolen materials to parts of the home being damaged while under construction.

Before renovation starts, talk with your agent about how your policy responds during remodeling and whether you need any extra protection.

Learn more about homeowners insurance during renovations.

Can upgrades lower my home insurance premium?

Sometimes, yes. Certain home improvements can reduce risk and qualify you for discounts that could lower your home insurance cost.

For example:

• Updated electrical and plumbing: In some states and situations, updates to older homes could qualify for a renovated home discount.
• Security system or smart home devices: Adding certain protective devices could earn a smart home discount, depending on the policy and state.

Remember, since discounts vary by state, policy, and eligibility details, the next best step is a quick review with your agent.

Helpful checklist before (and after) you remodel

Use this simple list to help ensure your remodeling plans are better protected:

• Share your project with your agent early
• Keep receipts, invoices, and photos of the finished work
• Review your dwelling limit (replacement cost)
• Ask if endorsements make sense (like water backup/sump pump failure)
• See if you’re eligible for any renovations savings

Scheduling an annual personal insurance review is a good way to revisit your coverage as your home and needs change. Connect with your American Family Insurance agent and schedule yours today.

This information represents only a brief description of coverages, is not part of your policy, and is not a promise or guarantee of coverage. If there is any conflict between this information and your policy, the provisions of the policy will prevail. Insurance policy terms and conditions may apply. Exclusions may apply to policies, endorsements, or riders. Coverage may vary by state and may be subject to change. Some products are not available in every state. Please read your policy and contact your agent for assistance.

Discount, savings and product eligibility varies based on the way you purchase insurance, by state, property type and policy form. Discounts may not apply to all coverages on an auto or home policy. Discounts do not apply to life policies. Exclusions may apply.