The Impact of Property Upgrades on Insurance

Having an adequate amount of insurance to protect your property is essential. Property upgrades can significantly increase the amount of insurance you need, or even lead to a denial of coverage. Therefore, it is important for property owners to understand the impact of upgrades on insurance.

What Is an Upgrade?

An upgrade is a change or improvement to an existing property. Upgrades come in all shapes and sizes, and can be anything from replacing a roof to installing a new kitchen. Depending on the upgrade, it can affect the amount of insurance you need and/or the cost of coverage.

How Do Upgrades Affect Insurance?

Upgrades usually increase the value of your property. That means your insurance will need to reflect the updated value of your property. If you don’t update your coverage, you may not be sufficiently insured in the event of a loss.

In some cases, upgrades can even lead to policy cancellation or non-renewal. If the upgrade is deemed too risky, or if it increases the potential of a major loss, the insurer may decide to cancel or non-renew the policy.

Common Types of Upgrades

There are many types of upgrades you can do to an existing property. Some of the most common include:
Adding a swimming pool
Installing a new roof
Adding a deck or patio
Installing a new HVAC system
Replacing the plumbing

Questions to Ask Before Making an Upgrade

Before making any property upgrades, it is important to discuss the impact of the change with your insurance company. Some questions you should ask include:

  • Will I need to increase my coverage?
  • Will the upgrade trigger a rate increase in my coverage?
  • Will the upgrade lead to a policy cancellation or non-renewal?
  • Do I need special insurance for the upgrade?
  • Are there any discounts or incentives available for making an upgrade?

Your insurance company can provide you with answers to these questions and assist you in determining the impact of the upgrade on your policy, as well as the amount of coverage you will need.

Upgrading Your Policy

If you are planning on making an upgrade, it is important to make sure your policy covers the new additions. If you have already made an upgrade, you should immediately contact your insurance company to discuss the impact on your policy. Your coverage should be updated to reflect the new value of your property and any special coverage needed for the upgrade.

Other Considerations

When considering an upgrade, it is important to be aware of building codes and zoning regulations. These codes can affect the type of upgrade you can make and the amount of insurance you need. With some upgrades, such as a swimming pool, you may need to purchase additional coverage for protection against liability.

Benefits and Risks of Property Upgrades

Property upgrades can lead to a variety of benefits and risks. On one hand, they can increase the value of your property and lead to additional discounts and incentives. On the other hand, they can lead to additional liabilities or cause your policy to be cancelled or non-renewed.


Property upgrades can have a major impact on insurance coverage. It is important to understand the implications of the upgrade before making any changes to a property. By speaking with your insurance provider and being aware of building codes and zoning regulations, you can ensure your property is adequately insured. The Impact of Property Upgrades on Insurance is one area all property owners should be aware of in order to keep their property adequately protected.

What types of upgrades typically increase property insurance rates?

1. Installing a swimming pool

2. Renovating or remodeling the home

3. Adding a trampoline, tree house, or other high-risk structures to the property

4. Increasing the dwelling coverage amount

5. Adding a home-based business

6. Installing a higher-value roof

7. Installing a security or alarm system

8. Adding synthetic stucco siding

9. Operating a professional day care in the home

10. Installing a large electrical generator

What factors can cause an increase in homeowners insurance rates?

1. Higher risk of natural disasters in the area

2. Older home, which is more likely to incur damages from age and wear and tear

3. Certain types of dog breeds or other pets

4. Pool or trampoline on the property

5. High value home, pricey home improvements, and extra features like a home office

6. Adding a new roof or remodeling

7. Sub-standard construction materials

8. Multiple claims in a short period of time

9. Unpaid premiums or late payments

10. Low credit score

What factors can cause a decrease in homeowners insurance rates?

1. Increasing the deductible: Raising the deductible on an insurance policy increases the amount of risk taken on by the policyholder, which is often rewarded by a lower premium.

2. Installing safety devices: Installing safety devices such as smoke detectors, security systems, deadbolts, or fire extinguishers can help reduce the risk of loss, reducing the cost of premiums.

3. Paying in full: Paying an annual premium in full can help reduce costs since homeowners insurance carriers often offer a discount for policyholders who pay the full amount instead of making monthly payments.

4. Bundling policies: Bundling other insurance policies with a homeowners insurance policy can help reduce the cost of premiums, as insuring multiple policies with one company often receives a discount.

5. Making home improvements: Making home improvements that increase energy efficiency or lower the risk of damage, such as installing a new roof or upgrading to energy-efficient windows, can help reduce the cost of premiums.

6. Good credit score: Showing proof of good creditscore may qualify a homeowner for lower premiums since insurers deem a good credit score evidence of responsible management.

7. Age of home: Age of the home usually affects premiums, since older homes may require more repairs and maintenance, making them more risky for insurers.

8. Group discounts: Group discounts may be available for those in a homeowners association, active-duty military members, senior citizens, and other groups.

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