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Updating your home? Your homeowners insurance might need an update too

Whether you build an in-ground pool or custom cabinets, when you make home improvements, don’t assume your old insurance policy has sufficient coverage to protect all your upgrades.

If you still live in the home you bought 10 years ago—or even just two years ago—chances are that it’s a very different home from the one you first moved into.

Just think about it: Whether you’ve added a sophisticated cast-iron clawfoot tub to the master bath, built the ultimate home theater on your ground floor, or created an outdoor oasis in your own backyard, with every improvement you’ve not only reinvented the look and feel of your home, but potentially increased its value by thousands, or maybe even hundreds of thousands of dollars.

Even less exciting home improvements, like lowering your home’s energy costs with better insulation, top-tier windows, and smart thermostat and lighting technology, are potentially going to add dollar signs to your home’s replacement cost as well as to your home’s sales price when, or if, you decide you want to sell.

In summary: The home you own now probably isn’t the same exact home you bought. And that means the homeowners insurance policy you started with may no longer be the insurance policy you need.

Studies repeatedly show that, of homes worth $1 million or more, nearly half are underinsured. With one in every 15 homeowners filing a claim every year, it’s a smart idea to make sure your home insurance policy is still the right policy for your home, or you could be left with a costly gap in your insurance coverage.

“We work with clients ranging from a typical, successful family with a nice home and a couple of cars, to clients with a net worth in the billions with homes in various locations,” says Ann-Marie Rollo, vice president, Private Client Group at Eastern Insurance in Norwell. “Insurance is all about protecting your investments and your current and future wealth, as well as providing you with peace of mind.”

Renovating? Here’s some food for thought

Industry experts say that there is a huge need to educate homeowners on how best to protect the many changes they make to their home and the growth of their assets throughout the years.

One Eastern Insurance account executive recalled recently walking through a client’s Back Bay brownstone to view a major renovation, which had increased the reconstruction value of the home from $6.9 million to $8.5 million. There were significant updates on every floor, including an elevator, a transformed upper floor complete with custom glass walls, and updated bathrooms with modern vanities, glass shower doors, and marble and tile flooring.

If the homeowner had not been in touch with her Eastern Insurance account executive to share these changes, none of these improvements would have been included in the dwelling coverage amounts in her homeowner’s policy.

If this doesn’t sound like too big of a deal to you, then consider if something unexpected had happened prior to the policy being updated, like a fire or severe weather damage to the home. Sure, the client’s home would still be covered for repairs or a rebuild, but only based on the home’s original reconstruction value–a whopping $1.6 million dollars less than the value of the renovated home.

“In keeping us informed of changes to their home, clients have peace of mind that their home will be rebuilt or repaired with that same workmanship, design, and quality of materials used during their renovation,” says Meghan Anderson, a Private Client account executive at Eastern Insurance.

Unfortunately, most people don’t think to do that, which may be due in a large part to a lack of understanding of their insurance policies. According to a J.D. Powers consumer study, 48 percent of homeowners surveyed admit that they don’t completely understand their insurance. If you’ve never had the unique coverages provided by your insurance policy explained to you by a professional, it would be easy to overlook that many home improvements could have an impact on your home’s value, and subsequently require attention from your insurance agent.

Not every renovation requires a change to your policy, however, so here is a list of updates most likely to bump up your home’s worth, and, at the very least, that should prompt a call to your local insurance representative.

  • A new roof
    It’s not exciting. But replacing an older roof that has curling, buckling, and/or missing shingles with a brand new one with architectural shingles goes a long way toward increasing the value of a home.
  • A new in-ground pool
    We don’t blame you for opting for luminous tiles, cascading water, and mood lighting when you decided to add a pool to your backyard. We know you are excited about this addition, however your insurance company may not be. The insurance industry describes pools as an “attractive nuisance” for a reason–while your home is now the popular one on the block, it’s also a lot riskier.
  • An addition
    Whether it’s a custom wine cellar with mahogany tables and paneling, an additional bathroom replete with radiant heat flooring and imported Italian marble, or an addition that has added 1,000 square feet or more to your home, these changes likely mean your insurance policy needs to be adjusted. But here’s an important point: Make sure you change your policy at the beginning of the construction phase. That way, in case of an accident or fire during the building process, the new space already has coverage.
  • Kitchen renovation
    If your policy was written before you dove headfirst into a complete redo of your outdated kitchen, then you might still have the perfect insurance–for the kitchen that’s no longer there. Now that you’ve knocked down a couple of walls; replaced the cabinets, countertops, and floors with eco-friendly materials; and added a Viking range, oven, refrigerator, and dishwasher, your policy probably needs some customizing as well.

Renovations can be messy, but improving your insurance coverage to protect them is simple

“One of the best things you can do to properly insure your home is to speak with your independent agent or broker,” said Vince Burgey, Personal Risk Services manager at the Boston Branch of Chubb. “They can work with a carrier that can help evaluate your home’s replacement cost, which is what it would take to rebuild your home in the event of damage. Should your home be damaged or destroyed, the full value of your home will be accounted for.”

As more homeowners invest in their homes with custom workmanship, design, and materials, a more customized insurance experience becomes an option more people should consider, experts say. The insurance industry typically considers a home to be “high value” if it has a reconstruction cost, custom craftsmanship and features, or valuable art or antique furnishings, valued at more than $1 million dollars.

Gary Schwartz, who specializes in helping homeowners across New England organize their finances and estates, says insurance should be top of mind any time your family home or assets change. But he’s surprised at how few of his clients have actually taken the next step to talk to their insurance agent in detail about their insurance coverage. This is not just important to do on the first day of the policy term, but through the years as you expand and make upgrades to your home(s) and belongings.

In addition to covering your distinctive house, condo, or apartment, a comprehensive insurance review will also evaluate the many valuable personal belongings that you’ve probably collected over time to see if they need additional coverage: antiques and fragile items, designer furnishings, luxury vehicles and classic cars, motorcycles, estate jewelry and watches, wine and distilled spirits collections, yachts or other watercrafts, sports memorabilia, and more.

“Premium home insurance carriers are also quite comfortable with insuring unique or larger art or jewelry collections.” Rollo says. “And, unlike a traditional policy, would not require appraisals for items under $100,000.”

Another reason to reevaluate your current home insurance policy is that there are, for those eligible, a lot of exclusive options that you won’t find with standard insurance policies. For example, should you ever experience a covered loss under this type of insurance policy, you get to choose when and how you want to replace or repair your property, or even if you’d prefer to receive a cash settlement to walk away and start again.

Further, with premium home insurance carriers, you often get access to much more than insurance coverage and advice. For example, if you are building a new home, many of these insurers offer an on-site inspection with their risk management specialists who will tour the entire property looking for indications of issues, including water damage, leaks, blocked drains, and other commonly overlooked problems that can result from construction and seriously damage your home. Plus, as Rollo says, when you’re ready to move into your new home, these insurers have consultants who will provide advice for transporting your valuables, like your fine art, safely and securely.

Whether your home is a finished project, in the process of getting a facelift, or in the early stages of being built, you may not only qualify for premium home insurance, but also truly need it to ensure that all the changes you’ve made to your house—and plan to make in the future—are properly protected.

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Eastern Insurance Group LLC offers a wide range of coverage options and opportunities to save with loyalty, good grade, and multi-policy credits. With walk-in service at over 20 different locations across Massachusetts, and 24/7 claims and customer service, you’re never far from good help. Visit Easterninsurance.com today and Join Us For Good. 

This content was produced by Boston GlobeMedia's BG BrandLab in collaboration with the advertiser. The news and editorial departments of The Boston Globe had no role in its production or display.