Home changes can affect your insurance policy
Every homeowner works to make the house a home through improvements and updates. Changing flooring, painting, even removing or adding walls allows a home to reflect the unique style and life of its owners. And for the most part, those changes don’t have a significant impact the owners’ home insurance policy.
But the worst time to find out if those changes or improvements are not covered is after a claim.
It is always a good idea to notify your agent when updating major systems in a home, especially an older home. Updates or full replacements of heating, plumbing, electrical, and roofing systems can reduce home insurance policy premiums. These improvements often mean older, even antiquated, systems are removed, thereby reducing risk of loss.
Significant home changes such as the building of an addition can increase the replacement value of a home. Most home insurance policies focus on insuring a dwelling for its replacement value as an example of indemnification; in essence the concept of making the insured person or property whole in the event of a loss.
Your home insurance policy will list the amount of dwelling insurance as Coverage A. Coverage A will also insure the addition of any deck or porch attached to a home.
In addition, if other structures such as sheds, detached garages, or pole barns are added to a property, your home insurance company should be notified. Structures on an insured property are covered on a policy as Coverage B Other Structures, and are often calculated through formula as a percentage of Coverage A.
For example, if a home is insured at $250,000 on Coverage A, then insurance policy formulas create $25,000 of Coverage B for other, detached structures. In most cases, this is enough, but the addition of an extra garage or pole barn could mean there is insufficient automatic coverage for the structure. Coverage B can also include in-ground or above-ground pools, hot tubs, gazebos, and more.
While it may seem insignificant or a hassle to contact your insurance agent when you make a change or improvement, if or when a claim is needed, you’ll be glad to know your home insurance policy is up to date.
Alan T. Girton is a veteran agent with Indiana Farm Bureau Insurance. To learn more, visit https://www.infarmbureau.com/agents/Alan-Girton-Howard-Kokomo-IN