Protection with New Construction or Remodeling Insurance
Policies Include Dwelling and Personal Property, Owners and Landlords Liability, and Workers Compensation
© 2011 by Kelly Smith all rights reserved; content may not be copied, rewritten, or republished without authors written permission. Authors Google profile
This article was updated on 03/05/20. Happy National Filet Mignon Day!
Digging turf with a spade
Not only is your home your castle, its also an investment, possibly your largest and most important. With that in mind, you should know that it can be a monster of a liability if you are under-insured. A penny saved today may mean a pound lost tomorrow. In any economy all investment must be safeguarded.
And that is precisely why home improvement as well as new construction lenders will most likely insist that you are sufficiently covered. When you are shopping for coverage, locate an insurance agent that specializes in construction if possible. As with many other things in life, sometimes it pays to use a specialist.
There are many types of policies out there, but in this article we will discuss the kinds that you need to be especially familiar with. As a basic rule of thumb, if you have to do any value estimation, the best strategy is to over-insure your property rather than go low.
Standard Dwelling and Personal Property Insurance
This is your basic homeowners insurance. Its intended to cover the replacement cost of your home and property in the cased of destruction or damage because of hurricanes, theft, hail, wind, fire, and so on. Some of these are riders on your basic policy depending on your situation, your carrier, and where you live. In the case of new construction, the monetary value of your homeowners policy ought to be large enough to replace it to the identical condition.
Critical note: this policy does not automatically cover flooding. For flooding, you will need a stand-alone policy. The good news is that it is very affordable. As a personal anecdote, our entire subdivision flooded from Hurricane Harvey. We have always bought flood insurance even though its not mandated by the mortgage company (we are not in the flood zone). After the damage we were covered. Other homeowners had to rely on FEMA and believe me, that just got them back to basic living conditions. Not pretty.
Bottom line, it is best to be prepared. But if you elect not to hedge your bets, now is the time to improve your credit score.
When a remodeling project has been completed, the monetary value of your house, your appliances, and the rest of your personal property needs to be reassessed. Next, the value of your coverage should be adjusted to reflect the new numbers.
Landlords, Owners, and Tenants Liability Coverage
These types of coverage is intended to protect you legally in the event of property damage and/or bodily injury if the decision to lease or rent out any part of your new or updated property. Consider the sign of the times a great many adult children decide to go home, rent out a room, or even take up residence gratis. All of these "other people" should be covered while on your property.
In a reversal of that scenario, financial situations may mandate that parents move in with their children. Retirement homes and assisted living facilities are simply too expensive for many retirees, particularly when pensions are disappearing and many haven saved.
Workers Compensation Insurance as a Protection Strategy
Many homeowners, particularly handy ones, choose to serve as their own building contractor. If this describes you, in most cases youll have to hire at least some subcontractors. For example, licensed electricians or plumbers are required to satisfy the building code. And dont forget delivery of building materials; those people are connected with your project.
Workers compensation coverage serves as protection against being sued for damages if any of these workers get injured while present on your property, even in cases where they themselves were negligent.
If they say that they have their own coverage, satisfy yourself that its current and adequate. Remember, we live in an increasingly litigious society where judges are known to make calls that are far from what the normal man-on-the-street would call rational.
A similar kind of insurance is known as contractors liability. Ensure that you have it, in writing, that in any contracts that contractors sign, they agree that they are responsible for providing this coverage.
There are municipalities that employ what is called umbrella coverage. This is a blanket style of coverage that simply supplements all exiting policies. It usually comes with quite a high limit.
Is it required coverage? No, but it is prudently recommended. It is useful to think of it as insurance insurance. The bottom line? You must protect yourself from lawsuits and contractors as well as mechanics liens.
I hope you found this article on new construction and remodeling insurance helpful. If so, please share the link with friends and social media. And if you have some related ideas please share them with our readers in the comment section below. Thanks for visiting; were all in this together!