How home renovations impact insurance premiums

The impact on costs of home renovations depends on what work you do and how big the changes are. If your renovations increase the value of your home or create new risks, you may have to pay more for insurance. Here are some things to think about:

Increased sum insured

Big projects, such as building a new room, fixing up your kitchen, or putting in new fixtures, can increase the cost to rebuild your home. This change affects your home insurance cost. Your insurance cost relies on the “sum insured.” This sum represents what you need to rebuild your home if necessary. If the value of your home increases, you should review your sum insured. This may result in higher insurance costs. It is important to ensure that all your new upgrades are fully protected.

Liability coverage changes

Some updates to your home, like adding a swimming pool, a spa, or a trampoline, can create new risks. You might need to get more insurance, especially liability insurance, to cover these risks. A higher amount of liability coverage could protect you if accidents happen at your home. Liability coverage is important for house insurance. It helps cover the costs if a guest gets hurt while at your place.

If you add a swimming pool, you may need to increase your liability coverage. A pool can create more risks, which could raise your premium. If you don't inform your insurer about these changes, it may cause issues later if something happens.

Hot tip: For more ways to save money on house insurance, read our blog post 8 Budget Hacks for House Insurance.

What does renovation insurance cover?

Renovation insurance is important for several reasons. It helps you stay safe from problems during your renovation project. This insurance can cover issues that need approval from your local council. It also provides protection against damage to your property during the construction period. Plus, it covers the theft of materials. If someone gets hurt while working on the insured property, this insurance gives liability protection too. If you plan on doing major renovations, you might need some additional insurance cover.

Steps to take after renovating

After you complete a big home renovation, you should inform your insurer about the changes to your renovation insurance policy. If you do not tell them, it might affect your excess for future claims. In some cases, it could even lead to the cancellation of your policy. By keeping your insurer updated, you ensure your existing house has full coverage for all the new features.

Get in touch with your insurer

One of the most crucial steps after a significant renovation is to inform your insurer about your home insurance policies. Failing to do this could impact future claims or, in some cases, even void your policy. By keeping your insurer updated, you ensure your home remains fully covered, including all those brand-new features.

Reassess your needs

Once renovations are complete, it’s wise to reassess the value of your contents and your coverage. Tools like the Cordell Sum Sure Calculator can help you estimate your home’s current rebuild value, factoring in all your new upgrades. Alternatively, you could use a platform like Quashed to compare policies across multiple providers, helping you find the best coverage for your updated needs and potentially saving on rising premiums. Quashed makes it easy to manage all your insurance policies in one place, so you have full visibility of your coverage.

Want a more detailed guide to understand how to ensure your home is adequately protected? Read our blog House Insurance: A Homeowner's Guide.

Consider extra options

Depending on the type of renovations, you may want to explore additional coverage options. If you’ve installed costly fixtures or custom finishes, consider adding a rider to protect high-value items. Or, if you’ve set up a dedicated home office, additional contents insurance can ensure your equipment is covered.

Example: Let’s say you’ve put in some gorgeous custom cabinetry or an expensive entertainment system. These additions may not be fully covered under your standard policy, so it’s worth checking in with your insurer to see if extra coverage options are necessary.

Renovations for rental properties

When you make improvements to a rental property, keep in mind that even small updates can change your landlord insurance. For example, adding a new kitchen or updating the bathroom will increase the value of rebuilding your property. This change also affects your liability coverage. Upgrading your rental means you are modifying what is covered and how much liability protection you have.

For more information, check out our blog Landlord Insurance: The Ins and Outs of Insuring Your Rental.

Renovation insurance costs: be prepared

Renovations can cost a lot of money. They can also raise your house insurance rates. It's important to understand how both big changes and cosmetic changes, including minor alterations, along with small updates, can impact your home insurance. You should find ways to keep costs low. This means knowing the contract price and getting renovation cover. Several factors can change your final insurance cost. These factors include the size of the renovation, the materials you choose, any new risks that could come up, and how these changes will affect the rebuild value and liability needs in different parts of the house.

Hot tip: If you want to find out the average prices for house insurance, car insurance, and contents insurance, check out our blog on the costs of insurance.

It’s a Wrap

Home renovations can make your house feel special and increase its value. But they also come with new things to think about regarding your insurance. Quashed can help Kiwis find, compare, and manage their insurance policies. This helps you to make sure your coverage matches your home's real value. It’s very important to inform your insurance company about any changes. You should also review your coverage and think about what updates you may need. Doing this will help keep your insurance up to date. It will give you peace of mind knowing your investment is safe.

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FAQs

Do I need to update my home insurance after renovations?

It is important to update your home insurance after you make any big renovation. If you do not update it, it might affect your future claims or could even lead to the cancellation of your policy.

How do home renovations affect insurance premiums?

Home renovations can lead to higher insurance costs, especially when considering sudden accidental loss. This may occur if the cost to rebuild your home goes up. It can also happen if you add new features, such as a swimming pool. A pool requires more liability coverage.

What types of renovations can increase my home insurance premiums?

Renovating your home can lead to higher home insurance costs. Adding things like a new kitchen, a new deck, or an extra room may increase these costs. Fun additions, such as a spa or a trampoline, can also introduce new risks. This might mean that you need more coverage for your home.

Will installing a swimming pool increase my home insurance costs?

Yes, adding a swimming pool will likely increase your insurance costs because it brings more risk. It’s important to inform your insurer so that your policy keeps you safe from any possible accidents.

What happens if I don’t tell my insurer about home renovations?

Not telling your insurer about home renovations can make claims more difficult later. In some cases, it might even cause your policy to be inactive.

Can I lower my home insurance premiums after renovations?

Potentially, yes! Certain upgrades that improve your home’s security (such as a modern alarm system) could help lower your premiums. For more budget-friendly ideas, check out our 8 Budget Hacks for House Insurance.