I was recently on the phone finalizing a home insurance policy for a customer when the customer told me that instead of doing some remodeling, like we had originally discussed, that he and his wife had decided to bulldoze the entire home to build their dream home. Assuming the customer was paying cash for the home there is nothing wrong with his plan; however, by bulldozing the home, the standard home insurance policy is basically rendered useless since there will be no structure to insure or personal property in the home.
So what should we do?
The proper policy for this situation is a builder’s risk policy. These policies are designed to cover homes during construction. They typically cover theft/vandalism of the tools and equipment being used to build the house. It also covers the materials used to construct the home once they are home the homesite. Many times, you can also include materials being held offsite. While these policies are generally more expensive than a standard home insurance policy, it is the proper policy to have should a covered event occur.
So what if you’re doing a major remodel – such as adding a bonus room over a garage or building an addition to the back of the house?
In these situations, you’ll most likely still need to purchase a builder’s risk policy. For minor remodels, however, a standard home insurance policy should suffice.
Here are some final tips for you:
If you’re using a contractor always check their insurance…. specifically their liability and workers’ comp insurance. If you’re doing an addition, don’t forget to increase your dwelling coverage to account for the new replacement cost of the home. And if you’re doing a small project and have friends helping, consider increasing your liability and medical payments coverage on your home insurance in the event one of them gets injured.
Want to see what insurance rates look like in your area? Get a quote online at shopitnow.chrinco.com or give me a call at 321-586-3754. Chrinco.com – insurance simplified.
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