Homeowners Insurance - Tips for Cleaning Up Your Homowner's Insurance Policy

After years of scrubbing your bathtub, you finally threw in the sponge and gave your bathroom a makeover. Now you’re relaxing in a four-jet therapeutic tub in the travertine and tumbled marble private paradise that is your bathroom.

Not only has your bathroom makeover created a mini-resort within your home, but it also has raised the resale value of your property. According to the 2006 “Cost vs. Value Report” published by Remodeling magazine, the cost of an upscale bathroom remodel averages $38,165 nationwide. The value increase from such a bathroom remodel ranges between $26,860 and $40,938 at resale depending on the location of your property, with the national average valued at $29,529. Homeowners can expect to recoup about 77% of the initial expense at resale.

With added value like that, your homeowners insurance policy may need a clean up as well.

After a remodel, homeowners insurance coverage can fall short in two areas: dwelling protection—covering structural upgrades to your home—and personal property protection. It is crucial that you discuss any and all built-in upgrades and additions to your dwelling—new tub, shower, sauna, cabinets, countertops, doors, and lighting—with your homeowners insurance agent.

While personal property upgrades in a bathroom remodel may be limited, they should not be overlooked if you have completed a substantial upgrade or remodel. When insuring your personal property, confirm that your homeowners policy covers the replacement value of your property, rather than just the actual cash value. Actual cash value consists of the replacement cost of an item minus the amount it has depreciated. Since appliances and electronics depreciate considerably over time, odds are that the actual cash value of an item will not be sufficient to pay for an equivalent replacement.

Keeping your homeowners insurance agent informed is good practice in general, but a remodel—even if it’s “only” a bathroom—merits an immediate call. Your homeowners insurance may be in need of some spring cleaning.

Bradley Steffens is a freelance writer and the author of twenty-eight books. He frequently contributes articles to websites, magazines, and newspapers, including Broker Agent Magazine, Gig, and the Los Angeles Times. His newest book is Ibn al-Haytham: First Scientist.