- Roof replacement can lower premiums and recover 100% of cost at resale (NAR); kitchen remodels may raise premiums due to higher replacement cost.
- Kitchen remodels may raise premiums due to higher replacement cost.
- Pool installation increases liability risk and premiums.
- Before renovating: Contact your insurer, keep records (contracts, permits, invoices, before/after photos) and review coverage annually.
How Renovating Your Home Could Raise or Lower Your Insurance Premiums
Many homes need some level of renovation to match a homeowner's preferences. While the property may have all of the essentials for immediate occupancy, you might want to undertake at least some renovating. Whether it’s remodeling the kitchen or replacing doors and windows, renovations can expand floor space and increase your enjoyment of your home, especially if it’s a smaller or older property.
Key Takeaways
Improvements can boost the value of your home. However, they can also affect your homeowners insurance. In some cases, the changes to the property could cause your premiums to increase, but it’s also possible for some upgrades to result in savings. How home renovation insurance works depends on whether the project raises your home's replacement cost, changes your liability risk or reduces the chance of future damage.
Quick takeaway: Insurance changes after a remodel often come down to three things – your home’s new value, any added risk and whether the update makes your home more resilient to damage.
Home renovations that can change your insurance costs
How a home improvement project affects your insurance premiums depends on the work you complete. In general, projects that increase your home’s value or square footage will cause your home insurance premiums to increase to cover the higher value of the property. By contrast, preventive measures, such as hurricane shutters or a home security system, can help you save money since they reduce the risk of damage.
Here’s what to expect to happen with your insurance coverage or its cost when you complete these five common projects.
| Renovation | How remodeling may affect insurance | What to ask your insurer |
|---|---|---|
| Replacing a roof | May lower premiums in some cases if the new roof improves durability | Does the new roof qualify for any home insurance discount? |
| Kitchen remodel | May raise premiums if the remodel increases replacement cost | Should dwelling coverage be updated after the remodel? |
| Installing a pool | May increase premiums because of property value and liability exposure | Do liability limits still fit the added risk? |
| Finishing a basement or attic | May increase premiums because of added living space | Does the added square footage change coverage needs? |
| Replacing doors or windows | May help lower premiums if upgrades improve weather resistance | Do these updates qualify for any savings? |
1. Replacing a roof
The National Association of Realtors (NAR) reported that replacing a roof is one of the most common projects for homeowners, and it also offers a strong return on investment. The NAR found that homeowners typically recover 100% of the roof’s cost when they sell the property.
Depending on your location and insurance company, replacing your home’s roof could help you save money on homeowners insurance.
Renovation cost: About $9,500 on average, according to home improvement site Angi, with a typical range of between $6,000 and $13,000. Of course, the size, complexity and materials of the roof could change this range.
2. Remodeling the kitchen
Whether it's a full kitchen renovation or merely updating the countertops, remodeling a kitchen is a project that can change the experience of living in your home. In the NAR’s study, homeowners who completed a total kitchen remodel reported high levels of satisfaction with their property.
Remodeling a kitchen can also substantially increase your home’s value. However, your premiums may increase to compensate for the higher replacement cost for your property. This is one of the most common ways remodeling affects insurance, because upgraded materials and finishes can cost more to repair or replace after a covered loss.
Renovation cost: $20,000 to $60,000 for a full kitchen remodel, according to JSB Home Solutions, which adds that budgeting between 5% and 15% of the home’s value is often recommended.
3. Installing a pool
A swimming pool can improve your home's resale value but may also increase your insurance premiums.
As a pool owner, you’re at an increased liability risk if someone is injured in your pool. In addition, swimming pools are prone to damage from weather-related incidents. For example, a fallen tree can damage the pool’s surface and mechanicals. As a result, your premiums could increase after you install a pool.
Renovation cost: An average of about $40,000 for an above-ground pool, according to data from home improvement site Angi. An in-ground pool could easily cost 50% more.
4. Finishing an attic or basement
Upgrading an attic or basement to make it more habitable can give you some much-needed extra living space. For example, you might add a bedroom to give a child their own room, or install an additional recreation space. A finished basement or attic can improve your home’s resale value (and make it easier to sell!), but it could also increase your homeowners insurance premiums.
With more living space, you’ll need increased dwelling coverage for the property, so your rates may rise. If you’re reviewing insurance after remodel work like this, it’s smart to ask whether your current dwelling limit still reflects the cost to rebuild your home as it exists now.
Renovation cost: $30,000 or so is typical to finish a basement, according to home improvement site Angi. Many attics cost far less than that to finish, although there are exceptions.
5. Replacing old doors or windows
If you notice drafts or cracks around your doors or windows, replacing them can lower your energy costs, keep you more comfortable inside your home and limit water damage. But, there’s another perk: It can also help you save money on homeowners insurance.
The reason relates to the home’s weather readiness. If you replace your windows or doors with wind-resistant or hurricane versions, you improve your home’s safety and stability, and reduce the risk of wind damage. Consequently, your insurer may give you a discount on your premiums.
Renovation cost: $300 and up per impact-resistant window, $1,000 or so per hurricane-resistant door.
What to do before and after a home renovation
Since home renovations may result in higher premiums, it’s a good idea to follow these steps so you can best plan how the changes you make will affect the cost of your policy:
- Contact your insurer: Review your planned renovations in advance with your representative to ensure you have the right coverage, including the needed liability coverage – which might have changed in light of updates to the property. In some cases, you may need to add coverage, such as increasing your dwelling coverage or adding extra coverage for other structures on the property.
- Keep records: As you get underway on your project, keep track of relevant contracts, permits, expenses and invoices. It’s also a good idea to take before-and-after pictures in case your insurance provider has questions about the project and its impact on your home’s value. These records can help support any claims you may need to file in the future.
- Review your coverage: Even after your project is complete, review your insurance policy at least once a year. Make sure your coverage limits still provide adequate protection for your home and other assets.
Before you start your renovation:
- Call your insurer to discuss planned changes and coverage needs
- Take before-and-after photos of the project area
- Save all contracts, permits, invoices and receipts
- Review whether dwelling coverage limits need to be updated after completion
If you’re planning major updates, home insurance policies and home insurance coverages can help you understand the kinds of protection that may be relevant after a remodel. You may also want to review when to review your homeowners insurance policy for other times it makes sense to revisit your coverage.
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FAQs about home renovation insurance
Home renovation insurance is not always a separate policy, but people often use the term when asking how a homeowners policy may be affected by renovation work, added value or temporary construction-related risks.
Yes. Insurance changes after a remodel may include higher premiums if the project raises your home’s replacement cost or liability risk. In some cases, safety upgrades may help you qualify for savings.
Remodeling can affect insurance by changing the cost to rebuild your home, the amount of living space you have, or the level of risk tied to features like pools or upgraded structures.
It’s a good idea to do that. Your insurer can help you understand whether your planned project may change your dwelling coverage, liability needs or other policy details.
Keep contracts, permits, invoices, receipts and before-and-after photos. Those records may help if you need to update your coverage or document the value of your renovation later.
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