What Kind Of Insurance Do You Need For Your Fixer Upper Home?

Now that you've purchased a fixer upper home, you'll want answers to these five common questions about insurance.

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What Kind Of Insurance Do You Need For Your Fixer Upper Home?What kind of insurance do you need for your fixer upper home?

Would you look at that Craftsman-style home with gabled roof and stained glass windows! And how about that two-bedroom bungalow with original clapboard siding?? 

So your eyes (and heart) have been caught by an older home that has a lot of charm, but also needs some work. Maybe a lot of work. As the wise man once said, “It’s our imperfections that make us beautiful,” which is a good adage to keep in mind when your construction project starts to make people insane. Turns out life isn’t always ripe olives and attractive Italian contractors! For most of us, unfortunately, it skews a little less “Under the Tuscan Sun,” and a little more “The Money Pit”.

To get you through your fixer-upper project, there is chocolate, trashy TV, and also insurance, which will keep things from ballooning totally out of control. So let’s dive into the what you need to know about insuring your older home.

What’s the first step after you’ve found your dream property?

First things first, you’ll want to get an inspection. This is always important no matter what type of home you’re buying, but even more so with a property that needs work. Before you put in an offer, you’ll want to know what issues there are with the home. Will you have to update the roof and rewire the entire house? Or are the problems mostly superficial? Now’s the time to find out. Once you run the numbers, you’ll know how much you can offer and what you’re willing to pay for renovations. 

Do you still need insurance if all your fixes are cosmetic?

Absolutely yes! While your coverage will depend on the scope of the project, you’ll still always need insurance. Never forget Murphy’s Law: “Anything that can go wrong will go wrong.”

However, if you plan to move in when the work commences or plan to do the work yourself (we see you, weekend warrior!), you’ll just need a standard homeowners policy — assuming you can complete the repairs within thirty days of closing. You’ll likely already have homeowners insurance because you often need it in order to close on a property.

What happens if you have to vacate the home during construction?

If your changes are structural, your provider will probably want you to get different coverage. That’s because buildings that are under construction are considered high-risk. Which makes sense! Think of the lumber and nails and all the many, many possibilities for error (we’ve all seen Grand Designs). To keep everyone and everything safe, insurance is a must.

When a property is empty for long periods of time, damage can go unnoticed — and this leads to further damage. That's where a vacant dwelling policy comes into play: If you’re not going to be living in your home during the period you do construction, you’ll want a vacant dwelling policy. 

This kind of coverage is also useful in other situations — say if you’re planning to sell a building that you don’t live in or have a rental property that is between tenants. Keep in mind that vacant dwelling insurance does not always cover theft or vandalism, and it does not insure for the contents of a property. Because an empty home is attractive to thieves, you’ll want to talk to your provider about what is and isn’t covered. 

When selecting a policy, you’ll need to provide the following information: 

  • The value of the lot where the home is located
  • The purchase price of the home
  • How much the remodel will cost and various details about the type of work being done

Because the timeline of a remodel can vary dramatically, these policies tend to have shorter periods. Be realistic about how long you think your remodel will take — and then probably pad that number a bit!

What about risks during construction?

For any construction project, you’ll want to get builder’s risk insurance, which helps protect your property from damages incurred and provides higher liability coverage than a homeowners policy. You’ll want this larger liability shield because you’ll have people working on your home, which increases the risk that someone gets injured. Builder’s risk insurance is especially important since a lot of sub-contractors won’t have their own insurance policies. 

In general, these policies cover damage from fire, wind, accidents, and vandalism, though some also offer protection for clean-up costs or how materials are stored off-site. Everything depends on the project at hand. So if your site includes a temporary structure, for example, or you're using a lot of hard-to-source marble, you may want to get that covered too. Do your research and talk to your insurance agent. 

But although builder’s risk policies vary greatly, there are common exclusions. These include the following:

  • Earthquake or flooding damage
  • Employee theft
  • Vehicles 
  • Defects in the design

As with everything, your agent can provide more info. And you can always purchase extra insurance or add a rider to make sure you’re properly protected. 

Will your homeowners policy be more expensive once the work is finished?

The short answer is maybe. The nicer you make your home, the more it will be worth, which means you’ll want a larger homeowners policy once you move in. It's also true that older homes tend to cost more to insure. 

That said, if in the process of renovating your property you make certain updates like improving the security system or updating the HVAC or plumbing systems, then it’s possible that your premiums will decrease. 

Regardless, you’ll want to compare policies and shop around once the project is finished and your fixer-upper is move-in ready. To help you do that, there’s Marble. With Marble you can shop for policies, compare premiums, and earn rewards — all from the comfort of your (newly) updated home. Sign up today!