As a property owner, maintaining and improving your home or rental properties is a significant responsibility. Whether you’re enhancing the aesthetics or upgrading major systems such as the roof, plumbing, electrical, or HVAC, these improvements not only increase the value of your property but also ensure the safety and comfort of those who live within. However, did you know that these improvements should prompt you to also update your insurance coverage? Insurance carriers are now requiring property owners to document these updates and use licensed contractors in order to provide adequate coverage. In this blog, we’ll delve into why this is crucial and the steps you should take to ensure you’re adequately protected.
The Changing Landscape of Insurance Underwriting
In the past, insurance companies might have focused more on the initial condition of the property rather than its ongoing maintenance and improvements. However, times have changed. Insurance carriers are becoming more stringent in their underwriting practices due to the rising costs of claims related to neglected maintenance and outdated systems. Water damage from leaking roofs, burst pipes, electrical fires, and more have led to substantial claims that could have been prevented with timely updates and repairs.
Why Updating Your Insurance Matters
- Accurate Coverage: When you invest in major improvements, the value of your property increases. If you fail to update your insurance coverage to reflect these improvements, you risk being underinsured. This means that if a disaster were to strike, your policy might not adequately cover the cost of repairs or replacements.
- Mitigating Risks: Insurance carriers are not only interested in insuring your property but also in reducing potential risks. Outdated systems and neglected maintenance increase the likelihood of accidents and damages. By updating your property’s major systems, you’re minimizing these risks, which in turn makes you a more favorable candidate for insurance coverage.
- Preventing Non-Renewals: Failure to properly maintain and update your property could result in non-renewal of your insurance policy. Insurance companies want to work with responsible property owners who prioritize the well-being of their homes. If you can demonstrate your commitment to maintaining your property through documented improvements, you’re more likely to have a stable insurance relationship.
Steps to Take
- Use Licensed Contractors: When making improvements to your property’s major systems, always opt for licensed and reputable contractors. Insurance companies value professionalism and expertise, and using licensed contractors ensures that the work is done correctly and up to code. Using an unnlicensed contractor may invalidate your insurance coverage and can subject you to fines.
- Keep Receipts for 10 Years: It’s imperative to save all receipts related to the improvements you’ve made. These receipts serve as proof of the work done and the expenses incurred. Keep these records organized and accessible for at least 10 years in case they’re needed for insurance verification.
- Notify Your Insurance Agent: As soon as you complete a major improvement, get in touch with your insurance agent. Provide them with a copy of the receipts and any relevant documentation. This proactive approach demonstrates your commitment to responsible property ownership and helps your insurance carrier accurately assess your coverage needs.
Conclusion
Property ownership comes with its share of responsibilities, and one of them is maintaining and improving your property’s major systems. The days of neglecting these updates and expecting competitive insurance rates are gone. Insurance companies now require evidence of these improvements and are placing a greater emphasis on responsible property ownership. By staying on top of updates, using licensed contractors, and keeping thorough records, you not only protect your investment but also ensure that your insurance coverage remains comprehensive and reliable. So, before you embark on your next home improvement project, remember to update your insurance coverage as well – it’s a decision that could save you from significant financial setbacks in the long run.
