When you’re looking at making changes in your life, insurance is typically the last thing on your mind. You’re focusing on the new renovations or your trip, or you’ve started a new business. Unfortunately, even small changes could have a huge effect on your home insurance. We’ll take a look at a few of the most common issues of unintentional voiding of a homeowners insurance policy.
Let’s get the big issue out of the way. Using your home for a criminal activity, which then results in damage to your home, voids your policy. When you hear of an illegal marijuana grow operation or a meth factory being set up in a private residence and a subsequent explosion or damage you should realize there’s no insurance coverage to rebuild that home.
Getting an updated kitchen, finishing a basement, or building an addition can be an extensive project. These kinds of renovations increase the value of your home and thereby increase the cost to rebuild your home should a total loss occur. If you fail to advise your insurance company about a major renovation you could find the limits of your policy insufficient to cover the damage. Here are some further issues, if you do not notify your broker, to consider when doing a renovation:
- Damage caused to your property during renovations is not covered
- After your renovations are complete any damage after, due to worker error, is not covered. Make sure your contractor has professional commercial insurance for his business
- If a contractor gets hurt on your property during the renovations you may not have liability coverage
- If you need to live elsewhere during the renovations and an accident happens you may not have coverage
Starting a Home-Based Business
A lot of people run their businesses from their homes. It’s convenient and cost effective. However, the standard homeowner’s policy typically has an exclusion stating that any damage arising from business operations in the home is excluded. As well, any injury to visiting customers, any damage to business equipment, and any inventory for your business would also not be covered if you don’t have specific insurance for your business.
Having your insurance company deny defending you from a lawsuit from a former customer could lead to bankruptcy. Therefore getting a home based business policy or a small commercial package policy is highly recommended.
Misrepresenting Your Property
Sometimes people misinform the insurance company about features of their home. The problem is the insurance company determines your premiums based on the description, size, construction and other features of your home. A single family home where the owner lives in the home will generate a lower insurance premium than a rental triplex with an absentee landlord. Why? A homeowner lives in the home and will constantly check on it, whereas an absentee landlord may only see the property on a weekly or monthly basis.
Being honest with your broker and insurance company means there will be less issues when a claim happens.
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