Home Renovations and Insurance: How Upgrades Change Your Coverage

You've just finished a $40,000 kitchen remodel with custom cabinetry, quartz countertops, and new appliances. Your home looks incredible. But there's a problem most homeowners overlook: your insurance policy still reflects the value of your home before the renovation. If a fire destroyed that kitchen tomorrow, your insurer would pay to replace the old one — not the upgraded version you just built.

Why Renovations Affect Your Insurance

Homeowners insurance is designed to cover the cost of repairing or rebuilding your home to its current state. When you renovate, you're increasing the value of your dwelling, which means your existing coverage limits may no longer be sufficient.

Here's how different types of renovations impact your policy:

• Kitchen and bathroom remodels: These are among the most common upgrades, and they directly increase your home's replacement cost. Higher-end materials and fixtures mean more expensive claims.
• Room additions: Adding square footage — a bedroom, home office, or sunroom — increases your dwelling coverage needs proportionally.
• Roof replacement: A new roof can actually lower your premium (especially if upgrading to impact-resistant materials), but it changes your home's insurable value.
• Basement finishing: Converting an unfinished basement into living space adds value that needs to be reflected in your policy.
• Swimming pool installation: Pools increase property value but also introduce liability risk. You may need both higher dwelling coverage and increased liability limits.

The Risk of Being Underinsured

The biggest danger of renovating without updating your policy is being underinsured. If your dwelling coverage limit is $350,000 but your home's actual replacement cost is now $420,000 after renovations, you have a $70,000 gap. In the event of a major loss, you'd be responsible for that difference out of pocket.

Some policies include an "inflation guard" endorsement that automatically increases coverage by a small percentage each year, but this rarely keeps pace with significant renovations. A $50,000 addition won't be captured by a 3% annual inflation adjustment.

There's another risk many homeowners miss: coinsurance penalties. Many policies require you to insure your home for at least 80% of its replacement cost. If you fall below that threshold because of unreported renovations, the insurer can reduce your claim payout proportionally — even for partial losses.

When to Contact Your Insurance Agent

The short answer: before the renovation starts, and again when it's complete.

Before construction begins:

• Notify your insurer about the scope of work. Major renovations may require a builder's risk policy or a temporary increase in coverage during construction.
• Verify that your general contractor carries their own liability insurance and workers' compensation. If a worker is injured on your property and the contractor is uninsured, your homeowners policy could be on the hook.
• Ask about any coverage gaps during construction. Some policies exclude damage that occurs during renovation work.

After the project is complete:

• Update your dwelling coverage limit to reflect the new replacement cost of your home.
• Document the renovations with photos, receipts, and contractor invoices. This documentation is invaluable if you ever need to file a claim.
• Review your personal property coverage if the renovation included built-in upgrades like smart home systems, high-end appliances, or custom fixtures.

Renovations That Can Lower Your Premium

Not every upgrade costs you more in insurance. Some improvements reduce risk, which can lead to premium discounts:

• New electrical wiring: Replacing outdated wiring (especially knob-and-tube or aluminum) reduces fire risk.
• Plumbing updates: Replacing old galvanized pipes with copper or PEX reduces the likelihood of water damage claims.
• Impact-resistant roofing: Certain shingle ratings qualify for wind and hail discounts in many states.
• Security and smart home systems: Monitored alarms, smart locks, and water leak sensors can earn small but meaningful discounts.
• Storm shutters and reinforced garage doors: In hurricane-prone areas, these upgrades can significantly reduce wind damage premiums.

How Truvo Helps Homeowners Stay Properly Covered

Renovations are exciting, but they create insurance blind spots that most people don't think about until it's too late. Truvo helps homeowners review their policies after upgrades, identify coverage gaps, and adjust limits to match their home's current value. Because we work with multiple carriers, we can also find competitive rates even as your coverage needs increase.

Don't Let Your Policy Fall Behind Your Home

Your home evolves — your insurance should evolve with it. Every significant renovation is an opportunity to make sure you're fully protected, not just partially covered. Take five minutes to review your policy after any major project. And if you're not sure whether your current coverage is enough, get a quote from Truvo and let us help you close the gap.