Think Twice Before That Renovation: 8 Surprising Ways Home Improvements Can Void Insurance

Introduction to Renovation and Home Insurance

It’s an exciting time when you’re planning a renovation. Whether you’re dreaming of a modern kitchen, a spacious new deck, or finally finishing that basement, it feels like progress. But in the whirlwind of decisions—choosing tile, picking paint, hiring help—there’s one thing many homeowners forget: insurance. And that can be a costly mistake.

Most of us assume that once we are insured, our home improvements are automatically covered. The truth is more complicated. A renovation can actually void your insurance if you’re not careful. That means if something goes wrong—say, a pipe bursts or a fire starts—you could be left footing the bill for damages your policy won’t touch.

Why does this happen? Insurance companies work with risk and every change you make to your home shifts that risk profile. New structures, wiring, or square footage alter what they’ve insured. If they weren’t informed, they can argue that your policy is no longer valid. Unfortunately, many homeowners only find this out when it’s too late, like during a claim.

So before you pick up that hammer or call a contractor, pause. It’s time to understand how the renovation you’re excited about could be the very thing that leaves you unprotected. And more importantly, learn how to avoid that fate.

Structural Changes Without Notification

Structural renovations—like knocking down walls, building a second story, or expanding your living room—are some of the most thrilling changes you can make. But they also come with the biggest insurance risks. Most home insurance policies require you to report these types of changes because they affect the structure and value of the home.

Let’s say you decide to remove a load-bearing wall to create an open-concept kitchen. You don’t inform your insurer because, well, it’s your house. But what if, months later, that decision leads to foundational issues or a part of your home collapsing? When you file a claim, your insurer might argue that your renovation significantly altered the house and increased its risk, something they were never informed of. As a result, they could deny your claim or even cancel your policy altogether.

Take the case of Linda from Ohio. She extended her kitchen by three feet into her backyard, excited to host larger family dinners. She forgot to notify her insurer. A storm later caused water damage to the new section. When she filed a claim, it was rejected. Why? Her insurer hadn’t accounted for the added footage, and technically, that portion wasn’t covered.

The lesson here? Never assume your policy covers structural upgrades unless you’ve talked to your insurer first. One simple phone call can save you from a financial disaster.

DIY Electrical and Plumbing Work

We all love a good DIY moment—especially when it saves money. But when it comes to electricity and plumbing, taking matters into your own hands could land you in hot water, literally and financially. These two areas are heavily regulated for a good reason: they’re high-risk.

Consider adding more outlets to your new home office by rewiring your basement. It seems simple enough after a couple of YouTube tutorials. But what if a small wiring error causes a fire? Or you could replace an old pipe yourself, and it bursts, flooding your newly tiled floors. If the work wasn’t done to code or if you didn’t hire a licensed professional, your insurance company can argue negligence and deny your claim.

Insurers often demand that licensed professionals perform such risky renovation tasks. This ensures that the work meets local safety standards and building codes. Anything less, and you’re basically giving them a reason not to pay.

Take Josh in Seattle. To make way for a new vanity, he rearranged his bathroom plumbing. When a leak destroyed the bathroom floor six months later, the adjuster noticed it was a DIY job and promptly declined the claim. The worst part? Josh had no recourse. The insurance fine print was clear: plumbing work had to be done by a certified plumber.

Bottom line: when handling high-stakes systems in your home, leave it to the pros. Saving a few bucks upfront isn’t worth the risk of losing tens of thousands in denied claims later.

Adding Square Footage Without Permits

Adding a sunroom, enclosing a patio, or building an extension is a dream come true for many homeowners. But if you skip the permits, you’re not just risking fines from the city—you could be voiding your insurance, too. When you increase your home’s square footage, you’re changing the very thing your insurance company has agreed to cover.

Permits serve more than just bureaucratic red tape. They’re proof that your renovation is up to code and safe. Without them, insurers might assume you cut corners. And if something goes wrong? You can’t rely on them to save you.

For example, a family in Texas added a spacious bedroom to accommodate their growing kids but didn’t want to wait months for permit approvals. When a tornado damaged their new addition, they found out the hard way that the insurer wouldn’t pay a dime. Why? Because the addition technically didn’t exist in the eyes of their policy.

To protect yourself, always pull the right permits and inform your insurance company. They may adjust your premium slightly, but that’s a small price to pay for peace of mind. After all, what’s the point of adding space if it comes with added risk?

Roof Replacement Without Professional Help

One of the most crucial structural components of your house is your roof, which is also one of the priciest to replace or repair. It’s also closely watched by insurers, especially if you’re planning a renovation that involves roofing. A lot of homeowners attempt to cut costs by doing it themselves or by hiring unauthorized assistance. This might seem smart in the short term, but it can spell disaster later.

Insurance companies expect roofing work to be done by certified professionals because poor artistry can lead to serious issues like leaks, mold, or even structural failure. If a claim arises from roof damage and it’s discovered that the job was done improperly or illegally, don’t be surprised if your insurer walks away.

Consider Maria from Florida. She replaced her shingles with the help of a few friends from the neighborhood. Months later, after a heavy rain, water seeped into her attic and damaged insulation and electrical wiring. Her insurance provider sent an adjuster who noted the subpar installation. Her claim was denied on the grounds of negligence.

Always choose certified contractors and keep records of the work. This not only protects your investment but also proves to your insurer that the renovation was done responsibly.

Installing a Pool or Hot Tub

Adding a pool or hot tub is one of the most luxurious renovations you can make, but it’s also one of the riskiest when it comes to insurance. These features aren’t just fancy upgrades; they represent major liability concerns. Think about it: pools increase the risk of accidents, especially drowning or slips, and that makes insurers very cautious.

You can be putting yourself in danger if you install a pool without telling your insurance provider. Let’s say a neighbor’s child sneaks into your backyard and has an accident. You file a claim, but your insurer finds out you added a pool without updating your policy. Boom—claim denied. Worse, your policy could be canceled entirely.

And hot tubs? They may seem harmless, but they pose electrical risks and can cause water damage if not installed properly. Plus, there’s always the possibility of injury. All of these increase your liability exposure.

That’s exactly what happened to Eric and Susan in Arizona. They added a hot tub to their back deck and never told their insurer. After a short circuit caused a fire, they were shocked to learn their claim was rejected. The insurance company argued that the electrical system had been modified without proper permits or disclosure.

Before adding any water-based features, talk to your insurer. They may require added liability coverage, fencing, covers, or alarms as part of your new policy terms. Don’t skip this step. Following the law is not as important as protecting your family and finances.

Neglecting to Update Policy Post-Renovation

One of the most common mistakes homeowners make is completing a major renovation and then forgetting to update their insurance policy. It’s easy to overlook, especially when you’re finally enjoying that brand-new kitchen or main suite. But you could be severely underinsured as a result of this error.

Renovations usually increase the value of your home. If your coverage doesn’t reflect those changes, you may not be fully reimbursed in case of a loss. For instance, say your house was originally insured for $300,000. After a $50,000 remodel, your home’s value increases, but your policy remains the same. If a fire destroys the house, your payout could fall short of the new rebuilding costs.

Then, there’s the problem of replacement cost coverage. If your insurer doesn’t know about the renovation, they’ll estimate damage based on the old design and materials, not the new high-end flooring or custom cabinetry you just installed.

Case in point: Steve in Michigan remodeled his entire first floor with hardwood floors, granite countertops, and custom lighting. Six months later, a burst pipe caused extensive flooding. When the adjuster showed up, the claim was processed based on outdated policy details, and Steve received only a fraction of what he needed to restore the new features.

What is the moral of the story? After every renovation, no matter how small, contact your insurer. Request a new home appraisal if needed and get your policy updated to reflect the current value and contents. It’s the only way to ensure you’re fully protected.

Using Unlicensed Contractors

Hiring a contractor without a license might save money upfront, but it could cost you much more in the long run, especially when it comes to insurance. Most insurance companies expect professional renovations to be performed by certified and licensed contractors. Why? Because licensed professionals are held to legal and safety standards. If you go rogue, you might risk your coverage.

Say your contractor installs a new staircase. It looks great—until a friend trips on a loose step and ends up with a broken ankle. You submit a claim, and your insurer finds out the job was done by someone unlicensed. Suddenly, you’re on your own for medical bills and legal costs.

Worse still, if the renovation caused major damage, like faulty wiring leading to a fire, the insurer could deny your entire claim, citing unqualified labor. These aren’t just horror stories; they’re real scenarios people face when cutting corners.

A couple in North Carolina hired a family friend to redo their roof. He was skilled but not licensed. After a storm blew several shingles off and water damaged the attic, their insurer refused the claim. Their out-of-pocket cost? Nearly $18,000.

Always verify that your contractors are licensed and insured. Ask for documentation and references, and even run a background check. Yes, it takes time—but when it comes to protecting your biggest investment, it’s absolutely worth it.

Converting Garages or Basements into Living Space

Turning unused space into livable square footage—like a garage, attic, or basement—can be a smart renovation. It adds functionality and boosts your home’s market value. But if you don’t do it by the book, it can leave massive gaps in your insurance coverage.

Insurers consider factors like safety, egress (exits), ventilation, and utility upgrades when assessing livable areas. If your converted basement doesn’t have proper windows or smoke alarms, for example, they might classify it as an uninsurable living space. That means damage to that area—whether from flooding, fire, or mold—won’t be covered.

Let’s say you convert your garage into a guest suite with a bathroom. You skip permits, thinking no one will notice. Months later, a pipe bursts, ruining the flooring and drywall. You file a claim, only to find that the area isn’t recognized as part of your insured structure.

That’s what happened to Kelly in Denver. She had spent $35,000 on the project. When the claim was denied, she was told the insurer had no record of that space being part of the insured home.

To avoid this nightmare, always pull permits and notify your insurer when converting spaces. Confirm that these areas are added to your coverage once completed. The last thing you want is to pay for upgrades and then pay again when they’re damaged.

Adding Luxury Features That Attract Risk

A home theater, a wine cellar, an outdoor kitchen, a skylight—these luxury renovations may make your home more enjoyable. Still, they can also increase your insurance premiums or even jeopardize your coverage if unreported.

Luxury features often involve high-end materials, complex systems, and specialized equipment. This raises the home’s replacement cost. If your insurer doesn’t know you’ve added expensive audio-visual equipment or gourmet appliances, they won’t factor those into your policy. In a loss event, you’ll be left underinsured.

Moreover, some features attract additional risks. Fireplaces, skylights, and outdoor kitchens can increase the chances of fire, water leaks, or injury. If you don’t disclose these features, your insurer could deny related claims.

Matt and Linda in California installed a wood-burning fireplace and never told their insurer. A chimney fire months later caused $50,000 in damage. Their insurer argued that the fireplace was an unreported risk and denied the claim.

To prevent situations like this, document all luxury renovations. Take photos, keep receipts, and share the details with your insurance agent. Even if your premiums go up, you’ll sleep better knowing your investment is protected.

Conclusion: Renovate Smart, Insure Smarter

A renovation is more than just an upgrade to your home—it’s a decision that impacts your finances, lifestyle, and, yes, your insurance. While transforming your kitchen or adding a deck might seem like the perfect way to boost your home’s value, it can quickly backfire if you overlook the insurance side of things.

Throughout this guide, we’ve explored eight surprising ways your renovation could void your home insurance—from DIY disasters and unpermitted additions to hiring unlicensed contractors and forgetting to update your policy. These aren’t just theoretical risks—they’re common, real-life situations where homeowners lost tens of thousands of dollars due to innocent oversights.

So what should you do? First, always notify your insurer before you start any major renovation. Ask about how the project will affect your coverage. Will your premium go up? Do you need additional liability protection? Are there specific permits or inspections required?

Next, hire licensed professionals and keep documentation of all work done, including receipts, contracts, and permits. When the job is complete, reassess your home’s value and request a policy update if necessary. This isn’t just paperwork—it’s the key to protecting your investment.

Lastly, think of your insurer as a partner, not an obstacle. Keeping them in the loop ensures your home improvements bring the comfort and security you planned, not unexpected headaches or financial setbacks.

Remember, it’s not just about building a better home—it’s about creating smarter protection. Before you swing that hammer, make sure you’re not swinging away your insurance coverage.