New Pool or Addition? Adjusting Insurance for Home Improvements

Making major upgrades to your home, like adding a pool, building an extra room, or remodeling the kitchen, can increase property value—but they can also impact your homeowners insurance. Failing to update your policy after renovations could leave you underinsured or facing unexpected costs if damage occurs.

Understanding how insurance for new home improvements works is key to protecting your investment. Some upgrades may raise premiums due to added risks, while others might qualify for discounts. Knowing what changes to make to your policy ensures that your home and finances stay secure.

In this guide, we’ll cover:

• Why home renovations affect insurance coverage.
• How different improvements impact your policy and premiums.
• Steps to update your insurance and avoid common mistakes.

By the end, you’ll know exactly how to adjust your coverage after a home upgrade, so you’re fully protected from potential risks.

Why Home Improvements Affect Insurance Coverage

Upgrading your home can add comfort, functionality, and value—but it can also change your insurance needs. Many homeowners assume their existing policy automatically covers renovations, but that’s not always the case. If your home’s value increases or new risks are introduced, your policy may need adjustments to provide full protection.

How Home Improvements Change Your Home’s Value

Home insurance is based on the cost to rebuild your house, not its market value. When you make upgrades like expanding your living space, adding luxury finishes, or installing high-end appliances, the cost to rebuild increases. If your policy isn’t updated to reflect these changes, your coverage may fall short in the event of a claim.

For example:

• Adding a room or finishing a basement increases the square footage, raising the cost of repairs after damage.
• Upgrading countertops, flooring, or cabinetry with premium materials raises replacement costs.
• Installing smart home systems or high-end appliances can increase the home's overall value.

Failing to adjust your coverage after these upgrades could mean paying out of pocket for repairs if a covered event occurs.

New Risks That Can Impact Your Premiums

Not all home improvements simply increase the cost to rebuild—some also introduce new risks that can affect your insurance rates.

• Swimming Pools & Hot Tubs: These are considered attractive nuisances, meaning they increase liability risk. If someone gets injured, you could be responsible for medical bills or legal costs. Many insurers require higher liability coverage when adding a pool.
• Expanding Outdoor Spaces: Building a deck, patio, or outdoor kitchen adds value but may increase the risk of weather damage or fire hazards.
• Finished Basements: While a finished basement adds functional space, it also raises the risk of water damage or mold if not properly waterproofed. Some insurers may recommend additional flood coverage.

On the other hand, certain upgrades can lower your insurance costs. Security systems, impact-resistant roofing, and storm-proof windows can reduce risks, making you eligible for discounts.

Understanding how home improvements impact insurance for new home improvements helps homeowners avoid unexpected costs and maintain proper protection. In the next section, we’ll break down specific coverage adjustments for common upgrades.

Coverage Adjustments for Common Home Upgrades

When making home improvements, updating your insurance is just as important as choosing the right materials or contractor. Some renovations increase your home's value, while others introduce new risks that may require policy changes. Below is a breakdown of how different upgrades can impact your coverage and what steps you should take to stay fully protected.

1. Pools & Hot Tubs: Increased Liability Risks

Installing a pool or hot tub adds value and entertainment to your home, but it also raises your liability exposure. Most insurance policies include personal liability coverage, but the standard limits may not be enough to cover pool-related injuries or accidents.

What to Do:

• Increase liability coverage to at least $300,000 or consider an umbrella policy for extra protection.
• Check if your insurer requires safety measures like a fence, locked gate, or pool cover.
• Ask about exclusions—some policies may not cover diving boards or slides.

2. Room Additions & Expansions: Higher Replacement Costs

Expanding your home by adding a bedroom, bathroom, or even an extra floor changes your square footage and rebuilding cost. If your policy isn’t updated, your coverage may not fully cover damages after a disaster.

What to Do:

• Notify your insurance company about the additional square footage to adjust your dwelling coverage.
• Request a reassessment of your home’s replacement value.
• If the addition includes high-end finishes, ensure your policy accounts for upgraded materials.

3. Kitchen & Bathroom Remodels: Coverage for Upgraded Materials

Renovating a kitchen or bathroom can significantly increase the cost to rebuild your home. High-end countertops, custom cabinetry, and luxury appliances all contribute to a higher replacement value.

What to Do:

• Update your policy to reflect new materials and fixtures.
• Keep receipts and documentation of upgrades in case you need to file a claim.
• Consider adding extended replacement cost coverage, which provides extra protection if rebuilding costs exceed your current limits.

4. Roof & Window Upgrades: Potential Insurance Discounts

Some improvements can actually lower your insurance premiums. A new roof made of impact-resistant materials or upgraded windows designed for storm protection can reduce the risk of damage, making you eligible for discounts.

What to Do:

• Ask your insurer about discounts for wind-resistant roofing, hurricane shutters, or reinforced windows.
• Provide proof of upgrades, such as contractor invoices or manufacturer specifications.
• Check if your policy requires specific materials to qualify for lower rates.

Updating your insurance for new home improvements keeps your home properly protected and prevents gaps in coverage. In the next section, we’ll walk through the steps homeowners should take to notify their insurer and adjust their policy after making upgrades.

Steps to Update Your Homeowners Insurance

Once you've completed a home improvement project, updating your insurance is the next critical step. Failing to adjust your policy could leave you underinsured, resulting in costly gaps in coverage if damage occurs. Here’s a step-by-step guide to making sure your insurance for new home improvements provides full protection.

1. Notify Your Insurance Provider

• Contact your insurer immediately after completing a renovation.
• Ask about premium adjustments and available discounts.

2. Request a Home Reassessment

• Ensure your policy reflects your home’s new replacement value.
• Consider an independent appraisal for an accurate estimate.

3. Review and Update Policy Endorsements

• Look into endorsements like water backup coverage or extended replacement cost coverage.

4. Compare Insurance Quotes if Needed

• If premiums increase significantly, get quotes from multiple insurers to find the best rate.

Avoiding Common Insurance Mistakes After Renovations

1. Not Updating Coverage Limits

• Increase dwelling coverage to match your home’s new value.

2. Overlooking Liability Coverage

• If you added a pool or other high-risk feature, increase liability protection.

3. Assuming All Upgrades Increase Value

• Some improvements, like DIY projects, may not raise your home’s replacement cost.

4. Failing to Keep Records

• Save receipts, contractor invoices, and before-and-after photos of renovations.

If you’ve recently completed a renovation or are planning one soon, now is the time to review your Homeowners Insurance to make sure your home and finances are properly covered. Taking proactive steps today can prevent unexpected expenses and give you peace of mind for the future.