Are you thinking of remodeling in Arizona? Consider the effect it may have on your insurance, by Peggie Simons.

By Peggie Simmons

Are You Thinking of Remodelling in Arizona? Consider the Effect it May Have on Your Insurance

Remodelling your home is a fantastic way to add more value to your home, but do you know that it can affect your insurance? A lot of homeowners don’t know this, and end up having an underinsured home. According to CoreLogic’s Residential Cost Handbook, about 64% of homeowners don’t have enough insurance and their homes are underinsured by an average of 27%.

But, what does it mean to be underinsured? Underinsured means that your insurance policy only covers a portion of your losses in a claim. Underinsured homeowners have insufficient coverage, leaving them with bigger expenses if they file a claim.

Imagine filing for a claim because of a disaster, only to discover that you don’t have enough coverage. You won’t be able to recover the costs of losing your home to such a disaster simply because you didn’t inform your insurance company of the new house upgrades. You may have to pay tens of thousands out of your pockets to cover the additional costs. That’s pretty bad. This is what happens when you are underinsured.

REMODELLING YOUR HOME IN ARIZONA AND WHAT YOU SHOULD KNOW

Once in a while, several house owners remodel their homes to match modern styles. Some add a pool to their homes, others add an office space for their businesses, while others upgrade their kitchen or bathroom. Remodelling increases the value of your home, in turn increasing the cost of your home insurance. This happens regardless of the type of renovation you are carrying out.

If you proceed with adding a pool to your home, you should know that the liability risk will increase, ultimately increasing your home insurance rates. With this pool added, you should consult with the insurance company immediately and have them look at your insurance options. The company may likely recommend a higher liability coverage than the standard one of even an umbrella insurance to cover costs of getting injured in by the pool or other worse case scenarios.

Same goes for adding an office space. This will increase your homeowners insurance rate, so it’s essential that you purchase an additional insurance policy. It should be enough to cover the pieces of equipment or machines used if you have any. If your existing coverage isn’t enough, you might not be able to replace your machines if they get damaged.

Interestingly, not all remodelling increases your home insurance rate. If you are making some changes that keep your home safer, like updating your electrical systems and plumbing network, your rates would be used after your provider has evaluated your home. If you are also replacing your roof or upgrading your HVAC system, you could see your insurance rates reduced. The insurer considers these upgrades as safety measures, and could reduce your premium up to a certain amount depending on the roof’s age. If you are lucky, you can get bigger discounts if you live in hurricane-hit areas.

INCREASING YOUR HOME INSURANCE AFTER RENOVATION: IS IT NECESSARY?

Increasing your home insurance depends on the type of renovation and the coverage you have in place. Upgrades like upgrading the roof and plumbing systems may not require you to increase your coverage. To be sure about how much coverage you need, it’s best to contact your insurance company.

The insurance company will use evaluation tools to determine how much coverage you need. If the upgrades increased the evaluation, you may need to increase the coverage. Without increasing the coverage, should any catastrophe happen, any upgrade made will not be covered. Make sure you inform your insurance company when you have done any type of home remodelling. they will impact your insurance policy. Are the upgrades compatible with your instance rate? It’s vital that you talk to your insurance provider during the planning stage to see if you’ll be increasing your coverage.

Remodelling can have a tremendous effect on your insurance. Before you indulge in such a step, it’s necessary to contact a real estate advisor to guide you through with the best way to remodel your home while protecting your insurance. Contact Eric L. Frazier, the CEO of The Power Is Now Media.

ABOUT ERIC L. FRAZIER

Eric L. Frazier MBA is a licensed Mortage Advisor NMLS 461807 with First Bank. He is the founder and CEO of The Power Is Now Media, a multimedia company that helps investors create wealth through real estate. Eric L. Frazier is vastly experienced and has been in the real estate industry for decades.

ABOUT THE POWER IS NOW MEDIA

The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, and is headquartered in Riverside, California. We are advocates for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities. The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com.

CONCLUSION

If you are thinking of upgrading your home by adding extra space or improving the amenities, consider how

References

https://www.corelogic.com/products/residential-cost-handbook.aspx https://www.summitinsuranceaz.com/news/2017/03/how-remodeling-yourhome-affects-your-insurance?mv=f