How Big Property Projects May Affect Home Insurance
If you’re an experienced homeowner, you know big-budget projects on your property can come out of nowhere, and that it’s best to have a rainy-day fund set aside to deal with them.
Some of these projects will sneak up slowly. You might have spotted the early signs when you bought the house and put it on the list of things that will have to be dealt with five or 10 years down the road. Others can come out of the blue because of bad weather, a natural disaster, or because of a problem with the house long-hidden was suddenly made visible.
No matter the cause, these problems can affect the safety and the value of your property, as well as your neighbours’, which is all the more reason you should plan for them and understand how it affects your home insurance policy.
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You Can’t Put Off the Inevitable
Nothing lasts forever, but the reason older homes last as long as they do is because the occasional big project is done when necessary to maintain the overall integrity of the structure.
Many things that go into calculating what your home insurance premium is. Your roof is the best example. No matter how well constructed your house, your roof will eventually need replacing — even the best quality shingles eventually wear out. Inspecting your roof annually and knowing its expected lifespan will allow you sock away the money you’ll need to re-shingle it when the time comes. Ideally, you want to be ahead of the curve because the deadline can suddenly advance a year or two with help from Mother Nature when a terrible windstorm rips off shingles or brings down a tree branch or two.
Speaking of trees, it’s always lovely to have them on your property, especially old growth ones that provide some shade on hot sunny days. But remember, those trees never stop growing, whether from the top or the bottom at the root level. Branches and roots can push into your home, causing damage to your roof or foundation, or possibly those of your neighbours’. You want to take care of this overgrowth before it’s apparent. Bear in mind that dead trees are just as dangerous as healthy ones — their brittle branches are more easily taken down in bad weather and put the surrounding property in jeopardy.
Major Repairs Are Lurking Inside the House
While Father Time and Mother Nature are frequently the cause of outdoor problems that create big property projects, what you do inside the home can set off a chain of events that can turn a minor repair into a capital project.
That is especially true of older homes that are prime targets for renovations. Deciding to put in new kitchen cabinets or updating the on-suite bathroom can reveal a pressing need to upgrade the electrical wiring or the plumbing. And once you start replacing either in one room, it makes sense to review the entire house and update all wiring or plumbing at the same time.
If your house was built before 1950, it might have dangerous knob and tube electrical wiring, while houses built in the 1960s and 1970s have aluminum wiring, which is also considered hazardous. Even if you have a newer home with copper wiring, it may not have been installed correctly — remember that celebrity contractor Mike Holmes got a whole TV show thanks to the mistakes of others.
These wiring and plumbing endeavours can also reveal other projects that shouldn’t be put off, such as structural decay or lack of sufficient insulation. Doing this work comprehensively and adequately can hurt financially in the short term, but pay off the long run, so all the more reason to have money set aside. You might even save money on insurance premiums.
Invest in Your Home Now and Save Funds Later
All of these home repair projects, big or small, can affect your insurance coverage, whether it’s your monthly premiums or the claim you can make if you do suffer damage to your home because this work was overdue.
For example, electrical wiring is typically covered by homeowner’s insurance if it’s damaged, but it won’t cover replacement costs for outdated wiring. And while it will cover damage caused to your home if wiring arcs or causes a fire, it’s something you’d want to avoid and would raise your premiums going forward. You’d also have to update the electrical anyway.
Similarly, plumbing, sewer lines, and septic tanks that are out of date may require additional coverage to protect your home from water damage caused by sewer backup, so fixing them before you have a problem is cheaper in the long run.
Outside, you might risk putting off replacing your roof for one more year but end up paying a higher price when storm damage causes a leak. Water damage makes up almost half of all home insurance claims. If your roofing materials have exceeded their suggested life expectancy, you may be required to replace the roof to get insurance coverage.
Knowing what you need to fix around the house and having the funds set aside to do it before it’s an emergency is less aggravating than having to file a home insurance claim. And, you don’t want to find out the hard way that you don’t have enough coverage.