What Covers A House During A Major Renovation

A homeowners policy is written on assumptions about an occupied, completed dwelling. A major renovation changes both conditions, and the coverage question is what applies while the work is underway.

Why the existing policy may not fit

Standard forms contain provisions that respond to vacancy, and a home emptied for extensive work can meet the policy's vacancy definition.

Construction materials on site are not the same as household contents, and coverage for materials before installation is limited under most forms.

The dwelling limit reflects the home as insured, not the home as it will be once the work adds value, which creates an insurance to value question.

What builder's risk covers

Builder's risk is a property policy written for a structure under construction or renovation, covering the work in progress and typically the materials intended to become part of it.

Limits are set to the completed value of the project, and the policy runs for the construction period rather than a standard annual term.

Coverage for materials in transit or at a temporary storage location is often available and is worth confirming rather than assuming.

Who buys it and who is named

Either the owner or the general contractor may carry the policy, and the construction contract usually specifies which. Naming both parties as insureds avoids a dispute over who may claim.

A lender financing the work will have its own requirement and will expect to be named, which mirrors the lienholder arrangement on other secured property.

Where the contractor carries the coverage, the owner should confirm the limits and the term rather than relying on a certificate alone.

The contractor's other coverages

General liability responds to third-party injury and damage caused by the contractor's operations, which is a different exposure from damage to the work itself.

Workers compensation covers injuries to the contractor's employees, and its absence can expose the homeowner depending on state law.

Requesting certificates directly from the insurers named on them, rather than accepting a copy, is the step that verifies coverage is actually in force.

Notifying your own insurer

Homeowners policies generally require notice of material changes, and a large renovation is one. Notice keeps the vacancy and value provisions from becoming issues later.

After completion, the dwelling limit should be revisited to reflect the changed replacement cost.

Policy provisions on vacancy and construction vary by form and by state and change over time; a licensed agent can confirm what a specific policy requires before work begins.