The Home Improvements That Will Impact on Your Insurance Premiums, for Good and for Bad

by | Dec 1, 2016 | blog, DIY Tips, Finance

There are any number of reasons why you may chose to undertake a home-improvement project, from creating a more family-friendly interior to improving the value proposition of your property. This can be a challenging and cost-sensitive exercise, however, while the expense and implications involved can also extend beyond bottom line purchasing costs.

You must also be aware that certain home-improvements are likely to have an impact on your insurance premiums, and will be considered alongside standard metrics such as location, age and the underlying property value.

It is therefore important to understand which modifications are likely to have the biggest impact on your premiums, as this enables you to identify potential pitfalls while embracing opportunities for improvement. Here are three home improvements that will impact on your insurance premiums in one way or another: –

Assorted work tools on wood


Adding Space to Your Kitchen or Living Area

As your family expands and your lifestyle changes, you may decide to extend your existing living space. While structural changes such as the removal of an internal wall or the construction of an extension can be costly enough by themselves, however, adding square footage to a property will also require you to alter your insurance policy. This will account for the value of the new space, ensuring that you paying a viable and compliant amount each month.

Of course, you can gain an insight into how your modifications are likely to impact your premiums by speaking to insurers in advance, but you will need to prepare for the fact that this will trigger a hike in your monthly repayments (or in some instances drive a need for an entirely revised policy).

With this in mind, you may want to consider alternative, non-structural modifications that create the illusion of space in your home. Integrating strategically placed mirrors throughout the home is an excellent way to achieve this, as these fittings optimise the sense of space and reflect natural light to illuminate specific rooms.

Constructing a New Roof

In the majority of cases, home-owners add a new roof to their property out of necessity rather than the desire to achieve a brand new aesthetic. While it may not be the most popular or affordable of home-improvements, however, it is something that can instantly enhance the value proposition of your property while reducing insurance premiums by between 10% and 20%.

For some insurers, this is the single biggest factor that impacts on home premiums, primarily because it accounts for the majority of losses due to adverse weather (depending on your location, of course). With this in mind, and depending on the age and condition of your roof, it may be worth completing modifications in a bid to improve your home’s value and achieve long-term financial savings.

On a final note, remember that while many policies cover roofs, insurers often use depreciation schedules to determine your level of coverage. This means that in some instances old roofing will not be covered at all, so building a new structure may make perfect financial sense.

Build a Home Office

We live in the age of a freelance economy, where are growing number of individuals work independently. This, along with more progressive flexible working directives and concepts such as BYOD, has also increased the number of people who work from home on a daily basis.

While creating a home office may seem like a relatively simple and nonintrusive modification, however, this can actually have a huge impact on your insurance premiums. Much will depend on the value of the space and the equipment that you include within it, so it is crucial that you speak to your insurer before making a commitment.

Interestingly, most modern home insurance policies include an allowance for business equipment, usually up to the value of $2,500 (£1,700). While this will be enough for the majority of service providers, however, those who have a more specialised niche and utilise advanced machinery will probably need to seek out extended coverage.

This could be as simple as adding an endorsement, but you will need to discuss your plans in detail before making a commitment. Otherwise, you may end up having an invalid policy that does not cover your contents.

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