Remodeling My House
Remodeling can be very rewarding, but also and a chore. But usually, the end result is worth it. If you do it right, that is...
Your insurance policy is usually not part of the to-do list when it comes to planning a home remodel, and rarely finds its way into the file folder with paint swatches, contractor bids, or hardware store shopping lists.
But it pays to start your home improvement project on a solid foundation, insurance wise. Call us, the WHINS Insurance Agency and let us “hammer out” a protection plan that can bear some weight.
Hiring a contractor? Check his insurance
Congratulations! A home remodel is an exciting undertaking and a professional contractor can definitely help. But what does this have to do with your insurance?
Quite a lot, actually. When hiring a contractor, it is very important that you check his insurance, and how it extends to employees or potential sub-contractors. If ‘your’ contractor doesn’t have adequate insurance protection in place and one of the workers gets injured on the job (your house!), they might end up suing you and you might be held responsible.
Protect yourself. Only hire a licensed and bonded contractor. And don’t take his word…ask to see the insurance policy so you can make sure that it is in force and that the limits are adequate. (It is absolutely OK to ask for an insurance certificate from your contractor. The contractor and his/her insurance agent should happily provide it. The problem is that not many people are aware of this right to see their contractor’s policy, and therefore don’t ask for it.) You should also confirm your contractor’s licensing status with the California State Labor & Industries Department.
There are three major parts of a contractor’s insurance policy:
Applies when an employee or sub-contractor gets injured on the job site. Worker’s Comp covers medical/ rehabilitation expenses and lost wages for the worker. If the contractor’s limits are not adequate, an injured worker may sue you.
On a side note: If you assume the role of being your own General Contractor, you may have to purchase Worker’s Comp Insurance before you hire sub-contractors. Contact the California State Department of Labor and Industries for more information.
Covers negligence on the contractor’s part which causes injury or property damage to others.
Covers damage to your home and materials, including materials that haven’t been installed yet.
Are you your own General Contractor? The risk may be greater than the savings!
Unfortunately, it’s not quite as easy as that. If you function as the General Contractor and hire sub-contractors to work in or on your home, you may be held responsible in case of an accident or an injury to a worker or to a third party (for example, a neighbor kid walks by your house just as one of the guys working on your roof accidentally drops his hammer and it hits the child).
Your homeowner’s policy may provide some liability coverage, but even if so, it may not be enough to cover your assets if you are sued for liability and medical costs.
Worker’s comp is not always required by law but if you are in the situation of hiring sub-contractors to work in or on your home and property, you may want to purchase Worker’s Comp insurance for your own protection.
Since this is a very complicated topic with many variables, you should speak with your agent before hiring anybody.
All in all, you might be better off both financially and risk-wise if you hire a licensed and bonded contractor who has the insurance and the experience. It may save you a lot of hassle and worries during an already stressful time.
D-I-Y (Do-It-Yourself) project? Some are covered, some are not. (But not because you did it yourself!)
Generally, your finished D-I-Y home improvement project would be covered for all the common perils insured on a homeowner’s policy, whether you do the work or a contractor does the work. But the perils covered on a homeowner’s policy usually have to be sudden and accidental occurrences.
And that’s the problem in this example. The answer here is: There might not be coverage. What happened here is a mistake, a construction defect. There are workmanship exclusions on a homeowner’s policy that apply whether the work was done by a contractor or the property owner. If the damage in this example was caused by faulty workmanship, not by a sudden and accidental occurrence, the loss would not be covered by your homeowner’s policy.
However, had you hired a contractor, you could sue him for repairs and or hold him responsible to fix the damage.
A side note: Water damage that happens over time (like a slow leak that causes dry rot) is generally excluded from coverage on your homeowner’s policy. So, it is critical to address any suspicious leaks immediately. They don’t go away on their own. They only become bigger (and possibly excluded) losses.
Major Remodel? Insure the “After” before it’s Done
If you don’t want to remember the “Before”, be sure to not leave your homeowner’s policy stuck in the past! If you plan a major remodel like an addition, a new deck, or a significant upgrade, be sure to call your trusty insurance agents at WHINS Insurance Agency to inform us about the scale of the remodel you are planning.
The replacement value of your home may now be significantly greater than it was before, and your homeowner’s policy limits might not be enough to cover your house if you have a total loss. Also, if you have an extended replacement coverage endorsement your policy contract requires that you inform your insurance company of any significant change in value (usually defined as improvements over $5,000.)
Finally, if you purchased new furniture or electronics, be sure to adjust the personal property limits on your homeowner’s policy.
However, don’t wait until all the work is done. During the construction phase, you may have a significant amount (and dollar value) of supplies stored on your property. If these building materials are stolen or destroyed before your remodel is finished, there may be inadequate coverage.
Some Remodels Can Make Your Insurance Cheaper!
If you did a major remodel that included updating certain systems such as...
Putting on a new roof
A security system
Or other features that improve the safety of your home...
...give us a call (818) 233-0825 and share the news! You may qualify for a new discount on your homeowner’s policy!