Insurance During Renovations: How to Protect Your Home and Finances

Renovating your home can increase its value, improve functionality, and bring a fresh new look to your space. However, it also comes with risks—property damage, theft, and liability issues can quickly turn a dream project into a financial nightmare. This is why reviewing your insurance during renovations is essential before any work begins.

Many homeowners assume their existing policy covers all scenarios, but that’s not always the case. Certain renovations can leave you underinsured or even void parts of your coverage if your provider isn’t informed. Understanding the right types of insurance and taking key precautions can protect your home, belongings, and finances throughout the renovation process.

Key Takeaways:

• Standard homeowners insurance may not be enough. Some policies exclude damage caused by renovations or don’t cover increased property value.
• Additional coverage might be necessary. Policies like builder’s risk insurance, liability insurance, and vacant home coverage can provide extra protection.
• Taking proactive steps can prevent financial loss. Notifying your insurer, hiring insured contractors, and securing your home can help avoid costly surprises.

By updating your insurance during renovations and knowing what coverage you need, you can move forward with your project confidently, knowing your assets are protected.

Does Homeowners Insurance Cover Renovations?

Many homeowners assume their standard policy will fully protect them during renovations, but that’s not always the case. While insurance during renovations may offer some coverage, certain changes to your home can create gaps in protection. Understanding what is and isn’t covered can help you avoid costly surprises.

What Standard Homeowners Insurance Typically Covers

A typical homeowners insurance policy includes coverage for:

• Structural damage caused by unexpected events like fires, storms, or vandalism.
• Personal property protection for belongings inside the home, such as furniture, appliances, and electronics.
• Liability coverage if someone is injured on your property.

However, once renovations begin, these protections may no longer apply in the same way. Depending on the scale of the project, certain risks could be excluded from your policy.

When Coverage Might Be Limited or Excluded

Home insurance providers often place restrictions on claims related to renovations. Some common exclusions include:

• Damage caused by construction – If an accident occurs during renovations (like a wall collapsing due to improper support), your policy may not cover the repairs.
• Increased home value – If your renovation significantly raises your home’s value, your existing policy might not cover the full replacement cost in case of future damage.
• Vacant home exclusions – If your home is unoccupied for more than 30-60 days during a major remodel, insurers may consider it a higher risk and reduce or void coverage.
• Water and fire risks – Certain renovations, like electrical upgrades or plumbing work, can increase fire and water damage risks, which may not be covered unless you update your policy.

Notifying Your Insurance Provider Before Renovations Begin

One of the most important steps homeowners can take is informing their insurance company before starting any renovations. This allows your provider to:

• Assess whether your current policy provides enough protection.
• Recommend additional coverage options to close potential gaps.
• Ensure you’re not unintentionally violating any policy terms that could result in denied claims.

Ignoring this step could leave you financially responsible for damages or liability claims that might otherwise be covered. By reviewing your insurance during renovations, you can avoid these pitfalls and ensure your home remains protected throughout the process.

Types of Insurance to Consider During Renovations

Not all home renovations come with the same risks, and standard homeowners insurance may not provide the level of protection needed for every situation. Depending on the scope of your project, additional policies can help safeguard your home, belongings, and finances. Understanding the different types of insurance during renovations ensures you won’t be left with unexpected expenses if something goes wrong.

1. Builder’s Risk Insurance: Protecting the Renovation Itself

Builder’s risk insurance covers property damage that occurs during the renovation process. It typically protects against:

• Fire, theft, and vandalism affecting construction materials and partially completed work.
• Weather-related damage, such as wind or hail destroying an unfinished structure.
• Structural collapses or accidental damage caused by the renovation work itself.

If your project involves significant structural changes—like a home addition or a complete remodel—your standard homeowners policy may not cover damage to the new construction until it’s completed. Builder’s risk insurance fills this gap, providing coverage for the duration of the project.

2. Liability Insurance: Protecting Against Injuries and Lawsuits

Even minor home renovations come with liability risks. If a worker, contractor, or even a guest gets injured on your property, you could be held responsible for medical costs and legal expenses.

3. Vacant Home Insurance: Protecting an Unoccupied Property

If your home will be empty for more than 30 to 60 days during renovations, standard homeowners insurance may not cover damage that occurs while it’s vacant.

4. Personal Property Coverage: Protecting Your Belongings

During renovations, your furniture, electronics, and other valuables are at higher risk of theft or damage from dust, debris, and accidental impacts.

By securing the right insurance during renovations, you can focus on the project itself without worrying about unexpected financial setbacks.

Steps to Protect Your Home and Assets During Renovations

1. Document Your Property Before Renovations Begin

• Take photos and videos of your home and valuables.
• Save receipts and appraisals for expensive items.
• Create a home inventory for insurance purposes.

2. Hire Licensed and Insured Contractors

• Verify general liability and workers’ compensation insurance.
• Request proof of coverage before signing a contract.

3. Secure Your Home to Prevent Theft

• Store valuables in a locked room or off-site.
• Install security cameras or temporary lighting.
• Limit access to your home by changing locks or codes after renovations.

4. Understand How Temporary Living Arrangements Affect Your Insurance

• Notify your provider if you’re living elsewhere during renovations.
• Check for additional living expenses (ALE) coverage.

Common Mistakes That Could Void Your Insurance During Renovations

• Failing to inform your insurance provider before making major changes.
• Not getting the right coverage, such as builder’s risk or liability insurance.
• Assuming contractors’ insurance covers everything, which isn’t always the case.
• Leaving valuables unsecured, increasing the risk of theft or damage.

By avoiding these mistakes and reviewing your insurance during renovations, you can prevent costly setbacks and keep your home protected.

Renovating your home is an exciting opportunity to enhance your living space and increase property value, but it also comes with financial risks. Without the right insurance during renovations, you could face unexpected expenses due to property damage, theft, or liability issues. By reviewing your policy, securing additional coverage when needed, and taking proactive steps to protect your home and belongings, you can avoid costly mistakes and complete your renovation with confidence.

Before starting any project, take the time to speak with your insurance provider to ensure you have the right coverage in place. If you’re unsure where to start, this guide on Home Insurance offers more insights on protecting your assets during renovations. A little preparation now can save you from major financial setbacks later.