Update Your Homeowners Insurance After Renovating Your Home

Your stainless steel appliances are in, your granite countertops are sparkling, and your refinished kitchen cabinets are glowing in the warmth of new lighting. Your home improvements are complete at last. Or are they?
Home improvements are at a record high—and for good reason. Remodeling increases the aesthetic appeal of your home in the short term and significantly boosts your property value. The 2006 “Cost vs. Value Report” published by Remodeling magazine reports that the average cost of a major kitchen remodel is $54,241. The value increase from such a kitchen remodel ranges from $38,884 to $58,004 at resale, depending on the location of the property, with the national average being $43,603. On average, homeowners recoup 80% of their remodeling expense. If you just spent the better part of a year’s salary replacing your earth-toned kitchen with something out of HGTV, don’t forget to protect your investment. Your homeowners insurance will need an update, too.
Home renovations usually result in inadequate homeowner insurance coverage in two areas: dwelling protection—covering structural upgrades to your home—and personal property protection. To receive adequate dwelling protection, tell your agent about all built-in upgrades and additions—windows, kitchen cabinets, custom countertops, new sinks and bars, new tile or hardwood flooring, plumbing and lighting upgrades.
You should also mention any major personal property purchases, such as high-tech appliances, new furniture, and expensive rugs—anything that can be removed from the property. Your insurance company’s standard personal property valuation may not be in line with what you really have. When insuring personal property, especially larger appliances and expensive electronics, confirm that your policy covers the replacement value of your property, rather than just the actual cash value, which is the replacement value minus the amount it has depreciated. Appliances and electronics in particular depreciate considerably, and it’s unlikely that the actual cash value will be enough to pay for an equivalent replacement.
Keeping your homeowners insurance agent informed about changes in your home is good practice in general, but a major update merits an immediate call. Bradley Steffens is a copywriter and the author of twenty-eight books. He has written for a range of clients in the financial, healthcare, and high tech industries, including Raymond James Financial, Cardinal Health, and Del Tel, Inc. His latest book is Ibn al-Haytham: First Scientist.

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