Most homeowners policies are written to insure a finished residence, not a construction site. Coverage may be limited, excluded or subject to restrictive endorsements once significant renovations are underway. For high-net-worth homeowners, this gap can be substantial.
Additionally, many carriers impose special renovation deductibles if construction is not properly disclosed. In some cases, these deductibles can exceed 10 percent of the dwelling value, potentially translating into hundreds of thousands( or more) in out-of-pocket exposure in the event of a major loss.
CONTRACTOR COVERAGE IS NOT A SUBSTITUTE It’ s prudent to confirm that your contractor carries appropriate general liability and workers’ compensation insurance. However, that coverage is designed to protect against claims arising from the contractor’ s negligence or employee injuries. It does not insure:
• The full value of your home,
• Theft of building materials or materials in transit,
• Storm damage during construction,
• Fire losses unrelated to contractor negligence,
• Relying solely on contractor insurance can leave a significant protection gap.
A STRATEGIC STEP BEFORE WORK BEGINS For substantial renovations, insurance planning should be treated as part of the project’ s financial strategy, not an afterthought. Before construction starts, homeowners should:
1. Notify their insurance advisor of the scope and timeline,
2. Review existing homeowners policy limitations,
3. Evaluate the need for course of construction coverage,
4. Plan for post-construction adjustments once the project is complete,
5. Discuss a waiver of subrogation with your broker, as it may impact both your insurance premium and eligibility.
An experienced private client insurance advisor can coordinate coverage from groundbreaking through certificate of occupancy, ensuring seamless protection throughout the project life cycle.
If you would like to consult with a private client specialist regarding an upcoming renovation, contact Starkweather & Shepley’ s office based in East Providence. ◆
STARKWEATHER & SHEPLEY INSURANCE BROKERAGE INC. 60 Catamore Blvd., East Providence, 401-435-3600, starshep. com
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