Renovations and construction: how to protect the home while work is underway

Why a renovation changes your insurance

A major renovation changes almost everything a homeowners policy takes for granted: who comes into the home, what materials are on site, whether the family still lives there and what it would cost to rebuild. The III recommends contacting your agent or insurer before construction begins, or shortly after, so coverage reflects the home's higher value¹.

The most common mistake is assuming the current policy responds the same way during construction. An addition, a new kitchen or a replaced roof raises the cost to rebuild, and if the dwelling limit is not adjusted, the home can be underinsured just when it is worth more. A home under renovation is also often empty for long stretches, which can trigger special policy conditions.

Builder's risk insurance

Builder's risk insurance protects the project while it is being built: the structure in progress and the materials on site. Either the owner or the contractor can buy it, so the construction contract should state clearly who buys it, in whose name and until when. This coverage usually ends when the work is completed or the home is occupied again; by then, the homeowners policy should already be adjusted to respond for the finished home, with no days left uncovered between one policy and the other.

The Florida Department of Financial Services (DFS) explains that these are named peril policies, meaning they cover only the events the policy lists². It notes that wind damage should be covered, subject to the other terms of the contract, but that some policies require construction to reach a certain stage of completion before wind coverage applies². It also clarifies that rain is not a named peril, although there could be limited coverage for materials on the job site if included by endorsement².

When the home sits empty during construction

The III explains that most homeowners policies include a vacancy clause, which limits or excludes coverage if the property is unoccupied for typically 30 to 60 consecutive days³. A family that moves to another home during a long renovation can fall into that situation without noticing.

The III advises always notifying the insurer if the home will be unoccupied for an extended period, and explains that vacant home policies and vacancy endorsements exist for those cases³. Also check whether the policy requires shutting off the water, maintaining the temperature or making regular visits while no one lives in the home.

Contractors, subcontractors and workers on site

The III recommends asking for proof of the contractor's workers' compensation policy, because injured workers may sue you if the contractor does not have proper insurance¹. It adds that independent builders, electricians and plumbers may not be covered under the contractor's workers' compensation policy, so verify each one's coverage¹.

Also ask to be named as an additional insured on the contractor's liability policy, so that policy can respond for you if a third party sues you over something related to the work. A certificate of insurance alone does not give you that right; it must be stated in the policy.

Acting as your own contractor has consequences. The disclosure statement the law requires from anyone pulling a permit as an owner-builder warns that if an unlicensed person or that person's employees are injured while working on the property, the owner may be held liable, and that the owner's homeowners insurance may not cover those injuries⁵. It also warns that if the home is sold or leased within 1 year after the work is complete, the law presumes it was built for sale or lease, which violates the exemption⁵.

The notice of commencement and the risk of paying twice

Florida's construction lien law requires the notice of commencement to be recorded and posted on the site before the first inspection⁴. The notice becomes void if work does not begin within 90 days of recording, and it expires 1 year after recording unless the notice states a later date, as it must when the contract's completion period is longer than 1 year⁴.

The warning the law requires is blunt: payments the owner makes after the notice expires are considered improper and can result in paying twice for the improvements⁴. In practice, ask for lien releases from subcontractors and suppliers before each payment, and consult your attorney before signing the contract or the notice.

After the work: update the policy

When the work is finished, confirm that the policy reflects the structure's higher value, and, as the III recommends, increase personal property coverage if you bought new items and keep the receipts¹. Keep the closed permits and final inspections: they show the work meets the current Florida Building Code, and unpermitted work can complicate a claim or a sale. It is a good moment to request a new rebuilding cost estimate and to review ordinance or law coverage, which pays certain costs of meeting the current building code.

If the work included a new roof, impact-rated windows or doors, or better roof-to-wall connections, request a new wind mitigation inspection. Those features can affect the homeowners policy rate, and the old form no longer describes the home as it is today.

How to reduce the risk

These steps protect the project, the workers and the family's assets:

• Notify your insurer before starting and confirm in writing how your policy responds during construction¹.
• Set in the contract who buys builder's risk and from what date it covers wind².
• Ask the contractor and each subcontractor for liability and workers' compensation certificates¹.
• Record the notice of commencement on time and ask for lien releases before each payment⁴.
• Lock up expensive materials and keep appliances off site until they are installed.
• Keep the site closed and lit and, if possible, protected by cameras or an alarm.
• Prepare a hurricane plan for the project: secure materials, scaffolding and unfinished openings.
• When the work is done, update the dwelling limit and request a new wind mitigation inspection.

If you are about to renovate and want to review how the home is protected during the work, write to me.