Home renovations or additions can increase the value and replacement cost of your home. The replacement cost is the amount of money your insurance company would need to pay to rebuild your home in case of a total loss. As the replacement cost goes up, your insurance coverage limits may need to be adjusted, potentially leading to higher premiums.

However, certain home improvements can lower your insurance rates; these are typically projects that make your home safer and reduce your risk of a claim. If you make any major changes to your home, you’ll need to review your home insurance policy to ensure you have adequate coverage. In this article, we’ll explore the different home renovations and additions that may lower or raise your homeowners insurance premium.

Home Improvements That May Lower Your Rate

Installing a Security System

In addition to giving you peace of mind that your home is safe, a home monitoring or security system can also help you save money on your homeowners insurance policy. Updating your security measures will reduce your risk of theft and break-ins. Insurers often offer discounts for features like burglar alarms and deadbolts.

Storm-resistant Improvements

Making your home more storm-resistant can help lower your homeowners insurance rate because it reduces the risk of damage from hurricanes and tornadoes. Homes that are better equipped to withstand storms are considered lower risk. Features such as impact-resistant windows and hurricane shutters can minimize damage from high winds, hail, and flying debris during a storm.

Replacing or Upgrading Your Roof

Depending on the age and material of your roof, your homeowners insurance premium can vary. Homeowners with older roofs are more likely to file a claim since they’re more prone to damage. Replacing or upgrading the material of your roof may help lower your rate. If your roof has wooden shingles, switching to a more durable material, such as metal or slate, will help you save money.

Home Improvements That May Raise Your Rate

Adding a Swimming Pool or Hot Tub

Swimming pools and hot tubs are considered potentially hazardous features. If someone is injured on your property by a pool or similar addition, you may be liable. Liability insurance helps cover medical and legal expenses related to the injury. Adding liability insurance will raise your premium. You may also need additional dwelling or other structures coverage to cover the cost of repairing your pool or hot tub if it's damaged by a covered peril.

Building an Addition

Building an addition to your home, such as adding a second floor or a new room, increases its square footage. Adding square footage to your home usually increases its replacement cost. As a result, your dwelling coverage will likely need to increase. If your home addition includes expensive features, such as new appliances or other valuable items, you may also need to increase your personal property coverage.

Installing Solar Panels

While solar panels can add value to your home and decrease your energy bills, they can also raise your insurance rate. This is because they add to the cost of rebuilding your home. Roof-mounted panels are usually covered under dwelling coverage, while panels on top of a detached structure fall under other structures coverage.

Before you make improvements to your home, it's a good idea to check with your homeowners insurance company about which upgrades may qualify for discounts or require extra coverage. Be sure to keep documents and receipts of improvements to prove to your insurance company, as this may be necessary to ensure eligibility. Homeowners insurance helps you repair or rebuild your home in case of a natural disaster or unexpected event; it’s essential to inform your insurer of any renovations to ensure your home is properly protected.