Home remodeling is a very rewarding investment. It’s also not cheap! So, before you start knocking down walls and remodeling your home, it’s important to know what remodeling does to the value of your house, how your homeowners insurance may be impacted, and whether or not doing the work yourself will save money. In this blog, we’ll discuss all three topics in detail so that you can make an informed decision about remodeling your home. Are you thinking about remodeling your home? Give our friendly, licensed agents in Ohio, Maryland, West Virginia, and Maryland a call, so we can discuss your options during this exciting time!
Could remodeling your home change the home’s value?
Remodeling a home can change the value of your property. Remodeling projects are expensive, and remodeled homes often sell for more than similar non-remodeled properties in comparable neighborhoods. This is because remodels typically add value to a house. Everything from updated kitchens and bathrooms to new additions that add square footage, which could increase the number of bedrooms, could lead to higher appraised values. A study by Forbes found that remodeling an older single family home increased its resale price on average $37,000 (or 25%).
Higher appraised values can also be tied to other factors like neighborhood demographics, proximity to schools or parks, number of bedrooms and bathrooms, setbacks from roads/streets.
TIP: When buying a house, it’s important to know what types of improvements it needs before making any offers – when you are getting pre-approved for financing. You want to get a complete picture of the remodeling needs and potential cost before you put down your money.
Contact your insurance agency before you start the project.
Make sure you contact your homeowners insurance company before remodeling, as some projects may affect the scope of coverage. For example:
- If you are remodeling a kitchen or bathroom and will be removing electrical outlets, a qualified electrician should advise on this first.
- Your remodel project could also involve work that affects structural components like the roof, foundation or exterior walls. This work may require additional permits and inspections from local authorities prior to commencement of construction, if it is within certain distances from other structures (for example other buildings). The policy would need to reflect these changes.
It’s also important to know that remodeling a kitchen or bathroom may increase your insurance premium because these remodels could result in higher replacement costs for the items. It’s worth noting that homeowners who perform their own remodel work will not only save money on labor but also get research credit for any time spent researching and planning, which can then be applied towards an upgrade at some point down the line.
If you are performing your own remodeling projects, it is critical that they meet all building codes so as not to void homeowners insurance coverage––which would leave you with no protection should something go wrong! A qualified contractor is best equipped to guarantee this happens in accordance with code requirements.
What you should discuss with your contractor
Contractors typically require remodeling clients to sign a remodel agreement (also known as an estimate or contract) before the project starts. It is important that this agreement includes all facets of the remodeling and how it will affect your homeowners insurance, so make sure to read any information pertaining to coverage carefully or speak with your agent before signing on the dotted line!
- Is everything spelled out in terms of what you’re getting for your money?
- Will there be permits required by law?
- Do they provide liability insurance for their work? They should say clearly if homeowners are responsible for providing this type of coverage.
Ultimately, homeowners need to know about these three factors––house value, homeowners insurance implications, and DIY versus contractor options––before remodeling. It’s important to get answers from the experts before you start a remodel project and that means doing your research!
What to know if it’s a DIY project
If you choose to take on the remodeling project yourself, then be aware of any changes that may impact your home’s value. For instance, even making small updates such as painting can bring about a significant increase in home value if it’s done correctly. DIY projects are also great because they offer more flexibility for people who know how to handle basic carpentry work and electrical repairs. With this in mind, there are some things you should know — especially from an insurance perspective.
If you remodel your kitchen, homeowners insurance may not cover the cost of replacing damaged cabinets. Homeowners who remodel their home are required to maintain liability coverage for property damage or personal injury that they cause while working on their project––and it’s important to make sure this is included in any agreement with a professional contractor before work begins!
It’s worth noting that homeowner’s risk increases when physical labor is involved because there are more chances for accidents like slips, falls from ladders etc. It also means higher replacement costs if something goes wrong. So take extra care when remodeling high up places such as a roof.
Recalculate the new value of your home with your insurance agent.
Once you’re done with your renovations, know that it’s important to recalculate your home’s new value. If you’ve included additions such as a new master bedroom, then this is something that can change your insurance coverage in more ways than one.
Generally speaking, you’ll want to contact our agents at Maholtra & Assoc. Insurance in Ohio, Maryland, West Virginia, and Maryland to get a quote on any renovation plans you have in mind. If possible, don’t make changes without first talking with one of our agents.
Take before and after pictures of the remodeling of your home.
If you’re going to make any big changes to your home, then it’s a good idea to take before and after photos. Not only can this help with insurance claims, but it can also provide confirmation for anyone who might be interested in buying your house. Projects should be photographed often as they progress.
Disclaimer: This blog post is meant for general informational purposes only and may not reflect your specific policy.
About the Author: Alekha is an expert in the insurance space and has been with the Malhotra & Assoc. Insurance team since its inception. Alekha works to provide expertly written and researched content for the Malhotra & Assoc. Insurance agency.