Here's a statistic: according to a 2016 survey, 28% of owners had plans to remodel their existing homes within the next 12 months. (For millennial homeowners aged 18 - 29, the number climbed to 37%).
As insurance agents, it's important to stay in touch with clients in order to provide the best, most up-to-date coverage. Many homeowners aren't familiar with remodeling insurance, how renovations will affect their home's value (and therefore, homeowner's insurance), and what delays/changes can affect their projects (and, ultimately, their wallets).
So talk to your clients, ask questions, and make sure they're covered during this exciting (yet stressful) process.
Here are 4 things insurance agents should ask their clients with home renovation projects:
1. Compare their current coverage to their project needs
Many clients assume their homeowners policies adequately insure their risk. In reality, says US Assure, most homeowners insurance limits coverage for remodeling, and generally does not offer the level of coverage available through a standard builders risk policy -- including scenarios like theft of materials or equipment, arson and vandalism.
2. Consider their environmental risk
Don’t rely solely on geography to determine clients’ risk, either. According to the National Flood Insurance Program (NFIP), 20% of the claims filed are from people outside of mapped high-risk flood areas. The Builders Risk Plan insured by Zurich offers clients the opportunity to add increased protection through optional coverage. By tailoring policies to meet your clients’ project needs, you can help them protect against losses incurred from flood waters, earthquakes, high wind and other unexpected exposures.
3. Prepare your clients for delays
The reality is, that 4 week timeline your clients were quoted could turn into 8 weeks. This isn't only inconvenient, it also causes extra expenses -- and clients without adequate coverage can be left to pay out of pocket. Builders risk policies can provide protection for exposures like soft costs (out-of-pocket expenses like additional tax or insurance payments, interest on construction loans and more) and business income/extra expense that may arise.
4. Discuss builders risk insurance
According to US Assure, a popular endorsement for home renovation insurance is coverage for change orders that can increase the value of the project, but are not reported in a timely manner. Simply put, homeowners often change their minds about the materials to be used in their renovated home, so builders risk insurance can be structured so that the project is covered in the event of a loss, even if the homeowner decided to upgrade materials after construction had already begun.
When selecting a builders risk policy, a homeowner can find peace of mind knowing claims against the homeowners policy will be minimized should a loss occur during remodeling.
The bottom line?
By checking in with your clients, you can anticipate insurable needs (and new revenue opportunities!), making it a win-win all around.
(Also: to learn more about the differences between homeowners insurance and builders risk, as well as how the gaps between those types of coverage can impact your client, download Is Homeowners Enough? A Builders Risk Coverage Comparison from US Assure. This guide help agents identify core differences between homeowners and builders risk insurance, and learn considerations for selecting the best option to protect your clients’ interests.)
Source: US Assure, 4 Considerations for Agents with Home Remodeling Clients
Photo credit: Flickr/Stephen Harris
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