Home Replacement Insurance Gaps

Home Tool Kit

Home renovation projects can completely change your house, make it more enjoyable, and increase the value of your home.

In fact, the resale value of the most popular remodeling projects has risen dramatically since 2012, according to Remodeling Magazine. This upward trend shows that, for many projects, homeowners are seeing a greater return on their investment when it’s time to sell their house.

However, as home values continue to rise from the ashes of the housing market crisis, and more homeowners are investing in renovations, another problem is surfacing: homeowners are failing to update their Homeowners insurance after remodeling to reflect changing home values, leaving them at serious risk.

Home Value vs. Home Insurance Coverage

Homeowners insurance covers your property, and can help cover the costs to rebuild after a partial or total loss (like a natural disaster, fire, or other covered damage). To get the most out of your insurance policy though, it’s important to choose coverage limits that accurately reflect the current characteristics of your home, and the true cost to reconstruct it.

Insurance agents do this by running a “Home Replacement Cost Estimator.” They ask you a series of questions about your property, and use industry information to provide an estimated cost to rebuild your house. This can give you a better idea of how much coverage you may want.

Renovations Alter Your Home’s Value

Renovations have been consistently shown to change the value of a home, usually giving homeowners a return on their remodeling investment when they sell the house. Currently, the most popular remodeling projects with the highest return on investment* are:

  1. Replacing the Front Door with a new Steel Door – 96.9%
  2. Adding a wood Deck – 87.4%
  3. Replacing older Siding with fiber-cement Siding – 87%
  4. Building an Attic bedroom – 84.3%
  5. Replacing old Garage Door with a new Garage Door – 83.7%

*Resale value as a percentage of construction cost.

Courtesy of Remodeling Magazine.

Changes like these in a home’s characteristics can mean a change in its market value (giving you that return on investment). However, renovations also affect a home’s reconstruction costs. This is why the last step in any renovation is to cover your new investment.

Talk to your insurance agent, or inform your provider before the renovation begins. This will help in:

  • Filling any gaps in your coverage that the renovation process creates.
  • Reassessing your home’s value and replacement costs after the renovation.
  • Updating your Homeowners insurance to cover the new home value the way you want.
  • Possibly protecting materials and workers in your home.
  • Determining your eligibility for Homeowners insurance discounts associated with renovations such as new electrical systems, plumbing, roofing, and adding security features.

It’s important to make sure your Homeowners insurance continues to provide the home replacement coverage you want. To fill gaps in your insurance after a renovation, talk to your insurance agent or provider.


The information contained in this page is provided for general informational purposes only, and is not meant as professional or expert advice. Every attempt is made to ensure accuracy and timeliness, however all content is presented without guarantees.