Did you know that renovations can increase the value of your home and that your insurance may no longer be adequate? Many homeowners forget to adjust their policy, leading to underinsurance and financial risks. Here's what you need to know:
- Prevent underinsurance: Check if the reinstatement value of your home is updated after renovations. This prevents payouts from being lower than expected.
- Always report changes: Notify your insurer immediately of changes like solar panels, luxury kitchens, or an extension.
- Extra risks during renovations: Consider vacancy, theft of building materials, and damage. Consider temporary insurance such as a CAR policy.
- New risks: Pools or home offices may require extra coverage.
Important: Ensure your insurance remains up to date after renovations. This prevents unexpected costs and offers financial security.
Insurance Issues After Home Improvements
Renovations can increase the value of your home and introduce new risks. It's important to adjust your insurance accordingly.
Higher Rebuilding Costs Can Lead to Problems
Renovations often increase rebuilding costs, on average by about 25%. If you don't adjust your insurance, this can lead to insufficient coverage. In the event of a claim, the payout may be lower than the actual damage, potentially causing financial issues.
New Risks Due to Adjustments
Certain home improvements can affect how insurers assess your risk. Here are a few examples:
| Adjustment | Impact on Insurance |
|---|---|
| Swimming pool or jacuzzi | Increases liability risks |
| Home office | Often requires extra coverage for business use |
These adjustments make it especially important to properly insure vacancy and potential damage during renovations.
Risks of Vacancy During Renovation
A home that is temporarily vacant during renovation work presents extra risks. Insurers typically charge an average of 25% more premium for vacancy. This is because unoccupied houses are more vulnerable to:
- Burglary and vandalism
- Water damage due to leaks
- Unnoticed technical problems
- Theft of construction materials
Damage During Renovations
During renovations, your premium may increase due to a renovation surcharge, averaging around 35% of your annual premium. For major renovations (more than 10% of the reinstatement value or from €500,000), a CAR insurance is recommended. This covers damage to the building, third-party property, and contractor errors.
It is wise to discuss these changes with your insurer in time to avoid unexpected costs.
Solving Insurance Problems
Ensure you remain well insured after a renovation. With these tips, you can easily adjust your policy to your updated home.
Adjust the Value of Your Home
After a renovation, it's important to recalculate the reinstatement value of your home. This helps prevent underinsurance. Update this value immediately to ensure your coverage matches the new situation.
Report Changes to Your Insurer
Renovations can change the risk profile of your home. Therefore, it's crucial to inform your insurer of all adjustments. This is especially true for:
- Extensions of more than 20 m²
- The installation of outbuildings larger than 20 m²
- Value-adding installations, such as solar panels
"Anyone carrying out work that changes the value or layout of the house must inform their insurer." - Peter Wiels, Assuralia
Consider Extra Coverage During the Work
During a renovation, you may face additional risks. Therefore, consider temporary insurances that protect you against damage and unforeseen costs. Here are some options:
| Type of Insurance | What is Covered? | Starting Premium From |
|---|---|---|
| CAR Insurance | Damage to construction, third-party property, contractor errors | €275 per project |
| Construction Insurance | Material damage, theft of building materials, storm and water damage | Variable |
| Temporary Extension | Extra coverage on top of your existing home insurance | Percentage of annual premium |
Additionally, check your contractor's coverage to further limit risks.
Check the Contractor's Insurance
Ensure your contractor is well insured. Keep an eye on the following points:
- Check if the contractor has CAR insurance.
- Look at the coverage and insured amount.
- Request a written confirmation of the policy.
- Consider additional insurances if necessary.
Keep all documentation, such as photos of the work and insurance papers, in case you need to file a claim. If in doubt, you can always contact your insurance advisor for personalized advice.
Changes You Must Report
Structural Changes
Large renovations can increase the reinstatement value of your home. Make sure to report any structural changes to your insurer to prevent underinsurance. Consider:
- Extensions of your home
- Installing a dormer
- Removing load-bearing walls
- Building an extension or conservatory
- Installing a swimming pool
Adaptations aimed at energy efficiency or luxury also fall under this.
Energy-Efficiency Adjustments
Sustainable improvements, such as installing new energy systems, affect your coverage. These often increase the reinstatement value and must therefore be reported.
| Type of Installation | Reporting Requirement | Important Details |
|---|---|---|
| Solar Panels | Yes | Provide installation and purchase costs |
"Anything that potentially changes the reinstatement value of your home must be reported to your fire insurer. This also applies to solar panels. This way, the insurer can correctly assess the risk and insurable value and you prevent underinsurance." - Assuralia
Luxury Improvements
Luxury upgrades in your home are also important to report. This applies especially to:
- Luxury kitchens with high-end appliances
- Design bathrooms with special features
- Custom-built wardrobes and furniture
- Exclusive floors or special wall finishes
If you live in an apartment, you should report these luxury improvements through the HOA. Always keep documentation, such as invoices and photos, to demonstrate the added value of these upgrades in the event of damage.
Updating Your Policy
Once you've adjusted your insurance and reported changes, it's important to carefully update your policy.
Keep All Renovation Documents
Keep all documentation of your renovation well-organized. Consider:
- Invoices and receipts of materials and work
- Photos of the situation before, during, and after the renovation
- Contracts with contractors and other involved parties
- Permits and technical drawings
- Certificates of installations, such as solar panels
These documents are important as evidence for your insurer and can help with any potential claim.
Recalculate the Home Value
A renovation can significantly affect the value of your home. Therefore, it's important to calculate the new reinstatement value. How much the value increases depends on the type of renovation:
| Type of Renovation | Average Value Increase |
|---|---|
| Expansion of Living Space | 60-100% of renovation costs |
| Sustainability Improvement | 75-100% of renovation costs |
| Deferred Maintenance | 80-100% of renovation costs |
| Kitchen/Bathroom | Maximum 50% of renovation costs |
For an accurate valuation, you can hire a certified appraiser. Did you know that improving an energy label to A or B can increase your home's value by approximately €6,000?
Report the Changes to Your Insurer
Inform your insurer about what has changed after the renovation. Send an email or letter with:
- An overview of the work carried out
- Photos of the renovation
- Copies of relevant documents
- The new reinstatement value of your home
"Anyone carrying out works that change the value or layout of the home must inform their insurer" - Peter Wiels, Assuralia
Check the New Policy Terms
When you receive an updated policy, it's wise to review it thoroughly. Pay attention to:
- The new insured value
- Adjustments in coverage
- Amount of the deductible
- Specific conditions for new installations
Ensure that the insured value does not deviate more than 10% from the actual reinstatement value. In case of a significant deviation, the "average clause" may be applied, which means you may not receive full compensation in the event of damage. Make sure you are well insured!
Conclusion
Ensure that your homeowners insurance remains up to date after a renovation to avoid financial setbacks. Research shows that many people face underinsurance. This could mean that in the event of damage, you won't receive enough compensation if your policy isn't adjusted to the new situation.
"For homeowners insurance, it is essential to be well insured during and after a renovation." - Michel Ypma, Insurance Expert
Since January 1, 2022, it's possible to get back about 30% of the costs if you take at least two energy-saving measures. This highlights the importance of a good plan following renovations.
Here are three steps you can take immediately:
- Ensure detailed documentation of all renovations.
- Calculate the new reinstatement value of your home.
- Inform your insurer about all adjustments.
By updating your policy, you prevent unexpected financial risks and ensure peace of mind. A small effort for a significant difference.
