W.J. Wheeler Insurance Company

It’s easy to assume that your homeowner’s insurance will cover any loss at your home, but even a simple renovation project can leave you holding the bag if there is a loss. Ask yourself a few questions before you take on a renovation project.

1. Will this project increase the value of your home?
“One-in-four home remodeling projects increase the replacement cost of a home by more than 25%. But too few consumers consider increasing their homeowner’s insurance limits to reflect their home’s increased value, says Michael Newsom of the W.J. Wheeler Insurance Agency. “This means you could be seriously underinsured.”

Most insurance companies require homeowners to insure their home to a minimum of 80% of its replacement cost to be eligible for full coverage. If coverage falls below that level and the homeowner experiences a loss, they will be penalized with a partial settlement — often thousands of dollars less than the actual cost to replace the damaged property. The worst case scenario is bankruptcy, which can happen when a homeowner suffers a total loss, and receives a settlement which doesn’t cover the outstanding debt.

2. If something happens during the renovation, will you be covered?
Homeowner’s insurance doesn’t cover everything. If you hire subcontractors, store building materials on site, raise your roof, tear down exterior walls, remove windows or doors or a chimney, you can create liability risks and leave your property exposed to theft and weather damage. A typical homeowner’s policy does not cover these exposures when created by the homeowner.

In addition, if you plan to leave your home during remodeling, be sure to check your policy. You might face a reduction in or elimination of coverage if you are gone for more than 30 days.

3. Is the contractor insured?
Ask contractors for liability certificates to show that they have this coverage. If the contractor has no insurance, it’s going to be up to your homeowner’s insurance to pay any claim against you (as the building owner.).

4. What is the contractor responsible for?
A contract establishing responsibility can help. If the contractor is responsible for uninstalled appliances, cabinets, carpet and other items that are damaged, destroyed or stolen, the contractor should have a builder’s risk policy or installation floater to cover these items. If you are responsible, check with your agent to make sure you have coverage.

Regardless of your answers, you should review your project with your agent. To be sure of getting the combination of coverage, service and price that meets your needs, consider sitting down and discussing it with a Trusted Choice® agent. It is free and can ensure that you are getting the best value possible on your homeowner’s policy.

W.J. Wheeler & Company, a Trusted Choice® agency, has been offering personal and commercial insurance to clients in Western Maine since 1864 with offices in South Paris and Bethel. On the web at www.wjwheeler.com.