Renovating or improving a home can be expensive, and homeowners should consider the return on investment they will get (especially if they finance renovations with a loan). To determine if an upgrade is likely to pay off in the long term, it should also be considered whether the changes to the property could affect home insurance premiums.
You see, the price of home insurance is based on the risk of a claim. And some home renovations can reduce the likelihood of this happening, which could lead to lower insurance costs.
Here are six improvements that could potentially make home insurance less expensive, as well as improve a property’s value and livability.
1. Install a home security system
Home insurance policies generally cover theft as well as damage caused by vandalism. A home security system reduces the chances of either type of damage happening. Many systems also include other types of monitoring, such as fire detection, and the alarm company can take quick action to alert the proper authorities if there is a problem.
Because a security system can protect against many common losses that lead to insurance claims, adding one can result in a significant drop in home insurance costs.
2. Upgrade windows
Storm or impact resistant windows reduce the likelihood of damage from wind and hail, which are two of the main reasons for homeowners’ insurance claims. Adding roll-down storm shutters also reduces the risk of damage. This type of upgrade will have the biggest impact on premiums for homeowners who live in areas regularly hit by hurricanes or windstorms.
3. Addition of an emergency water shut-off device
While home insurance policies do not cover flooding caused by weather events, they do pay for damage resulting from water leaks in the home. Some examples of this are a leaking refrigerator line or damaged pipes.
Homeowners can install devices that detect water leaks and shut off the water supply, limiting damage. Since these devices reduce the likelihood of serious water damage if something goes wrong, it can lead to a significant reduction in insurance premiums.
4. Installation of a new roof
A new roof could lower a homeowner’s costs for several reasons, depending on the situation.
If the property had an older roof that was replaced with a newer one, the policyholder might qualify for a discount on the age of the roof. For example, impact resistant roofing materials help protect against hail and lightning, which could lower the cost of the home insurance policy.
5. Modernization of doors
Hurricane-resistant exterior doors and garage doors can have a similar effect in reducing damage claims such as a new roof or impact-resistant windows. While these upgrades can be expensive, they can reduce premiums paid over time by making damage to a home less likely to occur.
6. Improve other home systems
For owners of older homes, updating the electrical and heating system can reduce the risk of fire or flooding. This, in turn, can lead to a reduction in home insurance premiums. It can also reduce energy costs, which can pay off for homeowners in two ways. That said, like other enhancements, updating these systems can be expensive.
For a homeowner who wants to make their home a better place to live, these six upgrades could potentially accomplish that task while making the property safer and lowering insurance premiums in the long run.