Your home is an investment, but it can also be a liability if you are under-insured. Also, home improvement and construction lenders will likely insist that you are properly covered. For best results, try to find an insurance agent that specializes in the construction field.
There are a number of types of coverage available, but this article discusses the types that you are most likely to encounter. A good rule of thumb is to over-insure yourself and your property rather than under.
Dwelling and Personal Property Insurance
This is your basic homeowners insurance covering the replacement cost of your home and property in the event of destruction or damage due to hail, wind, fire, theft, hurricanes, etc. During new construction, the value of the homeowners policy should be high enough to rebuild to the identical condition. It's important to note that this does not cover flooding. Flood insurance is a stand-alone policy but it is quite affordable.
Following a home remodeling project, the value of the home, appliances, and personal property should be reassessed and the value of the insurance policy should be adjusted accordingly.
Owners, Landlords, and Tenants Liability
This type of coverage is needed to legally protect you in the case of property damage or bodily injury if you intend to lease out any portion of your new or remodeled property. For example, in today's bad economy, many grown sons and daughters are choosing to return home and rent out a room.
In other cases, economic situations may result in parents moving in with their children rather than living in a retirement home or an assisted living facility.
Protect Yourself With Workers Compensation Insurance
Even if you are acting as your own building contractor, chances are that you will be having at least some subcontractors, such as licensed electricians or plumbers, doing some of the work. At the very least, you will have some delivery of building materials.
Without a workers comp policy, you put yourself at risk of being sued for damages if any of these individuals get hurt while on your property, even if they were negligent themselves. If they have their own insurance coverage, at least make certain that it is current and adequate.
A related type of coverage is called contractor's liability. Be sure to have it in writing in any contracts that contractors agree that they are responsible for providing this coverage.
Some areas also use what is called umbrella coverage. This is a blanket type policy that basically supplements all the other policies and is usually a quite high limit. Is it required? No, but it is sometimes recommended. Think of it as insurance insurance. The bottom line? Protect yourself from lawsuits and contractors and mechanics liens.
Kelly Smith - Kelly has over 30 years experience as a journeyman carpenter and 20 as a freelance writer and photographer.
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