If you are considering major renovations to your home, you should be aware of potential exclusions on your homeowners insurance policy.
Typically, a major renovation is defined as a project that is budgeted at 10% of the home’s replacement value or $500,000, whichever is less. Some homeowners policies consider occupancy as a major factor in offering coverage during construction: will the owner be inhabiting the space during construction, or will the home be unoccupied during renovations?
Typically, there are two options to consider: renovation insurance, which can be added on to the current homeowners policy, or builders risk insurance, which can be purchased as a stand-alone policy.
Another item to consider once renovations are completed is the total value of your home. The property section of your homeowners policy has a maximum payout value (limit), and that limit will continue as is on the policy unless you change it. So let your agent know right away of any substantial upgrades to your home.