This renovation has been on your mind for a while, and now it’s finally happening — the kitchen upgrade, the open living space, maybe even that extra bathroom. You’re not alone in it either. Nearly half of homeowners spent at least $5,000 on home improvements in 2024.
But here’s a question that gets overlooked in all the excitement: what if something goes wrong? A pipe bursts, an electrical issue sparks a fire, and a worker gets injured on-site. None of that is rare on a renovation — it comes with the territory.
Your homeowners’ insurance might cover some of it. It might not cover any of it. And that gap can end up costing more than the renovation itself.
What Your Policy Actually Covers
Standard home insurance is built to protect your house as it stands today. It wasn’t designed with construction projects in mind, which is why coverage gets murky the moment you start swinging hammers.
Here’s what’s typically covered:
- Damage to existing parts of your home caused by contractor mistakes
- Liability if someone gets injured on your property
- Theft of materials stored at your house
And here’s what usually isn’t:
- The renovation work itself, if it gets damaged mid-project
- Work done by unlicensed contractors
- Structural problems caused by the project
Most homeowners assume everything’s covered — and that assumption is exactly where the trouble starts.
When You Need to Update Coverage
Small projects rarely need a policy change. Painting your bedroom or swapping out cabinet hardware won’t move the needle on your insurance. Major work is a different story.
Give your agent a call before starting projects that involve:
- Adding square footage
- Removing or adding walls
- Electrical or plumbing updates
- Roof replacement
- Building decks or garages
These projects raise your home’s value, and if your coverage doesn’t keep up, you end up underinsured — meaning you won’t have enough to rebuild if disaster strikes.
Take a $40,000 kitchen upgrade. Six months after the work wraps up, a fire destroys it. Your policy still reflects the old kitchen value, so you’re left covering the difference yourself. Painful, and totally avoidable with one phone call before the work started.
What Your Contractor’s Insurance Should Cover
Professional contractors carry their own coverage, and before you hire anyone, you want to see proof of two things: general liability insurance and workers’ compensation.
General liability protects you if the contractor damages your property. Workers’ comp covers medical costs if someone gets hurt on the job site. Don’t just take a contractor’s word that they’re covered — ask for current certificates, and verify the coverage is active.
Why does this matter so much? Because if a contractor doesn’t have proper insurance and something goes wrong, your policy gets tapped first. Or worse, you could be held personally liable for an injury that wasn’t even your fault.
Builder’s Risk Insurance
For larger renovations, there’s another layer of coverage worth knowing about: builder’s risk insurance. It’s temporary coverage that protects your project while it’s under construction — materials on-site, work in progress, and damage from weather or theft.
You don’t always need it. But for major projects, or any time you’ve got expensive materials sitting outside for weeks, it fills gaps your regular policy doesn’t. Either you or your contractor can purchase it, and it typically runs 1% to 4% of your total project budget.
A good rule of thumb: if you’re nervous about the materials sitting in your driveway through a weekend storm, you probably want builder’s risk in place.
5 Steps to Take Before Work Starts
Don’t wait until the crew shows up to think about coverage. Here’s what to handle ahead of time:
- Call your agent and walk them through the project. Scope, timeline, materials — give them the full picture so they can spot any coverage issues early.
- Get a coverage review. Confirm your current limits still match your home’s value once the work is done.
- Document your home with photos. Take pictures of every room you’re touching before anything gets torn out. That documentation becomes your baseline if you ever need to file a claim.
- Verify your contractor’s insurance. Get certificates of insurance for general liability and workers’ comp, and keep copies on file.
- Update your policy limits if needed. If your agent recommends adjusting your coverage, do it before the first nail goes in — not after.
Most homeowners skip some version of this list, and then they’re surprised when a claim gets denied or pays out far less than expected.
3 Common Coverage Gaps to Watch For
Even with solid prep, a few situations have a way of catching homeowners off guard.
- Vacant home exclusions. If you move out for 30 to 60 days during work, some policies reduce coverage or exclude certain types of damage entirely. Worth checking your vacancy clause before you pack a single bag.
- Permit requirements. Claims tied to unpermitted work often get denied outright. Always pull permits when they’re required, even on projects that seem too small to bother with.
- Materials in transit. Your materials might not be covered until they actually arrive at your property. Damage during shipping can fall through the cracks if no one’s accounted for it.
When you talk to your agent, ask specifically about these three. General reassurances aren’t enough — you want to hear exactly how each one works under your policy.
Protect Your Investment
A renovation is exciting, right up until it isn’t. The homeowners who come out the other side without a coverage headache are usually the ones who made one phone call before the contractor showed up.
If you’ve got a project on the calendar, reach out to our team before the dust starts flying. At SFM Insurance, we’ll walk you through what your policy actually covers, where the gaps are, and what (if anything) needs to change. Prefer to talk it through over the phone? Give us a call at 937-382-2546.
