Does Home Insurance Cover Restoration Projects?

Your home insurance policy is designed to protect your home and its contents in case of an accident or disaster. However, your home and its insurance needs may not always remain the same. 

For homeowners planning significant restoration work, home insurance may not offer much support. The cause of the repair or renovation is typically the deciding factor in coverage.  

So, will your home insurance cover your project? 

Restoring a Home  
Home insurance does not provide coverage for home restorations. Home restorations are typically those that update a home to its previous condition. Although this process can raise the value of the home, insurers won’t fund it. So, those who wish to update an older home will likely do so out of pocket.  

Policies usually do not cover renovations to the home either. So, if you wish to make the home larger, your insurance cannot help. 

Emergency Restorations  
Sometimes, restorations are necessary, not cosmetic. For instance, if a fire breaks out in a home, it will likely cause significant damage. In this situation, the insurance company will likely cover the costs of restoration repairs up to the dollar amount listed on the policy. However, the provided funds may only be used to restore the property to its previous condition. The homeowner will still likely have to pay for further updates. 

Watch the Value 
If you decide to pay for restorations out of your own pocket, your home will likely be worth more than it once was. It may even be worth more than what you invested in the property.  

As a result, it is important to update your home insurance. If the home suffers damage now, you may need to file a claim. The policy will need to have a higher limit because the home has a higher value. Because of that, it will cost more to restore the home in the event of fire and other damage. So, be sure to speak to your home insurance agent about the changes you make. They can impact your policy in various ways. 

Accidents happen all the time for various reasons. Even though your home insurance policy will not cover elective restoration or renovation work, it can be invaluable when disaster strikes. Still, it is important to ensure your coverage matches your needs and your home value.  

If you plan on restoring or upgrading your home, speak with your insurance agent to make sure you are covered.