Insurance for a home remodel: what to ask before demolition

Three different policies get mixed together in remodel conversations. Yours covers the house under whatever your form actually says. The contractor's liability policy covers their operations, not your wish list. A builder's risk policy, sometimes called course-of-construction, is a separate policy some owners or contractors buy for the work in progress. None of them is a workmanship warranty. Call your own insurer before demolition, and write down what they say. This page is not a reading of your policy.

Tell your insurer the house is about to change

The Insurance Information Institute says that if you add a room, enclose a porch, or expand a kitchen or bathroom and you do not report the added space, you risk being underinsured. It also says to keep receipts and records in case the company asks for them (III, reviewing your policy). The receipt habit is the same one in track remodel receipts and home improvement cost basis.

Ask three plain questions: Does this policy cover the house while the work is underway? Are materials on site covered, and for which losses? What changes if we move out?

What a sample homeowners form says

The Insurance Information Institute publishes a sample HO-3 form. In that sample, Coverage A includes materials and supplies on or next to the residence premises used to construct, alter, or repair the dwelling. The theft peril in that sample does not include theft in or to a dwelling under construction, or of materials and supplies for the construction, until the dwelling is finished and occupied (III, sample HO-3). Your form may read differently. Ask. Do not treat the sample as your policy.

The Institute also says a standard policy will not cover damage from lack of maintenance, mold, or termites or other pests (III, disasters). That is not a workmanship warranty for the contractor, and it is not a promise that every mold claim is denied. If demo finds mold, the job steps are in mold or asbestos found during a remodel. The written promise from the contractor, if you have one, is in get the warranty in writing.

If you will move out

An empty house is a different risk. The Insurance Information Institute has said insurers may discontinue coverage if a home is unoccupied for more than 30 days and no one new has moved in, unless you arrange a vacancy permit before that, and that a vacancy permit may leave out theft, glass breakage, or water damage. The Institute says the permit varies by company (III, vacant homes). Ask your insurer before you move out. Do not assume 30 days is the number in your policy. If you are staying, the living arrangements are in remodeling while you live there.

The contractor's policy is not yours

Ask for a certificate, then confirm it with the insurer named on it, using a phone number the insurer publishes. What to look up is in check the license and insurance. Their general liability policy is about their work and their people. It does not replace your homeowners policy, and it does not replace a written warranty on the new kitchen.

Builder's risk is the separate policy people ask an agent about when materials will sit on site or the new work needs its own coverage. It is not required by a national rule. If you want it, decide in the contract who buys it, who is named, and how long it runs. Your agent is the person who can say whether your current policy is enough for this job.

Write down what you were told

Keep the date, the name of the person at the insurer, and what they said about materials, vacancy, and the added space. RenoBinder keeps the receipts next to the room. One room is free.

General information, not insurance advice. Your policy controls. Ask your insurer or agent before you rely on a sample form.

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