Planning a home renovation? Be sure to let your insurer know.

If you’re planning a home remodel and relying on a refinance, home equity loan, or HELOC to finance it, informing your insurance provider can head off financial risks during the construction phase and after.

Find out how to decide if your project warrants notification, how the remodel can affect your insurance costs, and the potential consequences of not telling your insurance provider about the home renovation.

Learn more: Homeowners insurance: What it covers and how much you’ll pay

Home improvement projects can range from painting an accent wall to adding square footage. Smaller, simpler projects may not require a conversation with your insurance company. Larger projects do.

There is no definitive line between a small and large remodel, but two factors can help you decide whether notification is necessary, according to Nick Ramirez, agency owner at Goosehead Insurance:

1. The amount of value added by the renovation

2. Whether the home will be vacant during the construction phase

Learn more: How to use HELOCs and home equity loans for home improvements

Ramirez highlighted structural projects, work that adds major value to the home, or renovations costing $50,000 as worthy of a call to your insurance company. “If your remodel is small — think painting walls, swapping out light fixtures, or cosmetic upgrades — you usually don’t need to loop in your insurance company,” Ramirez explained.

Moving out of the home for 30 days or more is another flag to contact your insurance provider, according to Ramirez.

Vacancy periods are problematic because homeowners policies commonly have language that limits coverage if the home is unoccupied for too long. For example, a policy might state that coverage is voided after a vacancy period of 30 days or more. If you have a claim after a remodel that required you to move out, the insurance company could use the vacancy clause to deny a payout.

To avoid that situation, Ramirez said, “Talk to your agent. Get their sign-off in writing so everyone’s on the same page.”

Learn more: What does homeowners insurance cover?

Claim denials can result if you don’t tell your insurer about a home remodel project. The vacancy clause is only one avenue for justifying a denial. Gregg Barrett, CEO at Insurance technology provider WaterStreet Company, said insurers can also deny claims if you change the home’s risk profile without telling them. A major remodel could easily affect the home’s risk profile.

The biggest risk of keeping your remodel a secret is being underinsured in a total loss situation. “If your house burns down and you didn’t tell your carrier about the $200,000 kitchen you recently installed, the payout may not cover the true loss,” Barrett explained.

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Dan Garzella, CEO and founder of the insurance brokerage The Garzella Group, recommended talking to the insurance company before any work begins. Travis Hodges, Managing Director, VIU by HUB, agreed. “If you don’t provide advanced notice, you could face potential coverage gaps, claim complications, or policy cancellations,” Hodges explained.

When you reach out to your insurance company, be prepared to share the project’s scope and timeline. Your insurance representative will let you know if any additional information is required.

Learn more: What does homeowners insurance not cover?

Your insurance costs can go up or down after a remodel, depending on the type of work completed. “Adding square footage or installing high-value finishes increases the replacement cost of your home, so you can expect your premiums to increase,” explained Barrett.

Diane Delaney, executive director of the insurance-focused professional membership community Private Risk Management Association, notes that some renovations can reduce risk for the insurer, which could result in lower insurance rates.

“If you have updated areas like your roof, plumbing, or electrical systems, you may, in some instances, see your rate go down.” Delaney continued, “By reducing risks with safer, more durable materials, you have made your home less likely to suffer costly losses, making it more desirable to insurance companies.”

Learn more: What is umbrella insurance, and why should you consider it?

Depending on the scope of the project, Garzella said you may need or want a separate builder’s risk policy. Builder’s risk insurance protects buildings or homes that are under construction. This type of policy covers the home itself, plus materials, supplies, and equipment related to the project.

Your insurance representative can help you decide if the added coverage is necessary and, if so, how to structure it appropriately.

Learn more: 7 things I learned after my house fire, according to an insurance expert

Ideally, you should contact your insurance company before the home renovation begins, not after. Advance notice can prevent problems with your coverage or claims later. Call your agent with a description of the project and your expected timeline. If you don’t have an agent, call your insurance company’s customer service line.

Learn more: Is homeowners insurance required? The answer might surprise you.

You should report home improvements to your insurance company, preferably before the work begins. Small cosmetic changes may not matter to the insurance company, but large projects do. Plan on reporting projects that increase the home’s value or require you to move out temporarily while the work is being done.

Renovations that increase the home’s value can increase your insurance costs. But renovations that modernize the home and improve its safety profile could lower insurance costs. Discuss potential projects with your insurance representative to understand the rate consequences that could apply to your situation.

Tim Manni edited this article.