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There are plenty of reasons to consider renovating your home. For one thing, you get to enjoy the improvements or additions whether that’s a remodeled kitchen or a new in-ground pool out back, for an improved quality of life.

It’s not all good news, however. Ignoring all the headaches associated with planning and implementing a home renovation project, there’s also the issue of your home insurance. It’s important to factor in how your home insurance premiums may change once you undertake a renovation of your home.

Bigger and Better Means Pricier

There are two main ways that renovations may cause your insurance premiums to go up. The first is when you expand your home’s square footage, because more house means there’s more to insure. Remember, your home insurance is calculated as a function of your home’s replacement value, or how much it would cost to rebuild the home. If you decide not to report the additional square footage, then in the event you suffered catastrophic loss, such as a fire that burned the home down, you wouldn’t have that additional space covered.

Of course, other renovations aren’t so much about adding space, but making the space you have better. Upgrading your kitchen with new appliances and light fixtures, for example, could increase the overall value of your house by thousands of dollars. To make sure that you’re covered, you’ll want to make sure your home’s contents coverage is sufficient to protect your possessions. Be sure you keep an active home inventory and update it after any renovations to reflect new upgrades or purchases.

Risky Business

In a few cases, additions to your home are actually considered higher risk to the home insurance provider. One of the best examples of this is the swimming pool. There more than 3,500 fatal drowning accidents between 2005 and 2014, which spells danger to insurers. The higher liability risk means higher premiums.

Does all this mean you shouldn’t renovate your home? Of course not! Renovation can improve your home’s resale value and make your family happy. The only caveat is to factor in how any renovation will affect your home insurance premium rate, so that you know you’re financially prepared on the other end of your renovation project.