Policy Insight: Made Home Upgrades? Here’s Why Your Insurance Needs to Know

New kitchen? Finished basement? Solar panels on the roof? That’s awesome, and probably a major upgrade to your lifestyle and your property value.

But here’s the kicker: If you don’t tell your insurance company about those upgrades, they might not be fully covered. And when the unexpected happens (hello, water leak), that could leave you footing the bill for improvements you already paid dearly for.

Let’s talk about why your insurer cares about home modifications, and why you should too!

 

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🏠 Insurance is Based on Risk and Value

When you first bought your policy, your insurer based your coverage and premiums on a snapshot of your home’s structure, size, systems, and replacement cost.

Now fast forward to the day you:

• Renovate your kitchen with custom cabinets and top-of-the-line appliances,
  
  

• Add an in-law suite or finish your basement,
  
  

• Upgrade your roof or HVAC system,
  
  

• Or install high-end fixtures or smart-home tech.
  
  

Each of these changes adds value to your home, and potentially changes the cost to repair or rebuild it after a loss.

If your insurance company doesn’t know about these changes, your coverage limit might not be high enough to fully restore your home. That’s called being underinsured, and it’s unfortunately common.

 

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🔧 Structural Upgrades Change the Rebuild Equation

Think of your home insurance like a repair plan. If you change the blueprint, you have to update the plan.

For example:

• Turning a crawl space into a rental-ready apartment? That’s added square footage and added liability.
  
  

• Replacing linoleum with hardwood? That raises the cost per square foot to rebuild.
  
  

• Installing solar panels? Now you’ve got expensive equipment that may require specific endorsements.
  
  

Tip: After any significant home project, ask your contractor for updated estimates of the home’s value or the specific project cost. Share those with your insurer or public adjuster.

 

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💸 You Could Miss Out on Full Compensation After a Claim

Here’s where things get real. If you file a claim after a loss and your insurer discovers upgrades you didn’t report, they might:

• Deny part of the claim,
  
  

• Cap your reimbursement based on outdated home value,
  
  

• Or, in the worst case, deny the claim entirely.
  
  

Even legitimate upgrades can look like red flags if your insurer wasn’t told up front.

Example: You renovate a bathroom and install $15,000 worth of tile and fixtures. Months later, a pipe bursts. If your policy still reflects the old bathroom, your payout might be based on builder-grade materials, not the marble countertops you just installed.

 

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🛑 Failing to Disclose Could Jeopardize Coverage

Beyond just underpayment, not disclosing major changes could be seen as misrepresentation, especially if the upgrade changes how the home is used (think: turning your garage into a home office or Airbnb space).

That’s why it’s always safer to over-communicate with your insurer than under-report.

 

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✅ What to Tell Your Insurer (and When)

You don’t need to call them every time you buy a new sofa, but for major projects, here’s your checklist:

• 🧱 Added square footage or new structures (garages, additions)
  
  

• 🔌 Major system upgrades (electrical, plumbing, roofing, HVAC)
  
  

• 🚿 Renovated kitchens or bathrooms
  
  

• ☀️ Energy efficiency updates (solar, insulation, smart-home tech)
  
  

• 🔐 New safety features (security systems, fire sprinklers)
  
  

• 🛏️ Changed home use (rental units, home business, etc.)
  
  

Tip: Notify your insurer before the project begins, or at least once it’s completed — so coverage adjustments can be made proactively.

 

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🚤 A Tug from Tugboat: Cover What You’ve Built

At Tugboat Claims, we often see homeowners surprised by how much their insurance doesn’t cover, especially after investing serious money into making their house feel like home. Upgrades are exciting. But to protect what you’ve built, you have to let your insurer in on the secret.

Need help reviewing your policy after a renovation or planning a claim? Tugboat’s here to guide you through the process, no guesswork, no pressure.

Disclaimer:

Tugboat provides guidance and support but does not operate as a licensed public adjuster or attorney. Tugboat does not negotiate or adjust claims on your behalf. The information provided is intended to empower you in managing your own claim, but it is fully your responsibility to pursue and handle the claim. Tugboat is not responsible for claim outcomes. Any tools and resources provided are based on the information you provide, which may be incorrect or incomplete.

Need expert guidance on a homeowner’s insurance claim? Tugboat Claims is here to help!