Why Your Dream Kitchen Renovation Could Trigger a Nightmare Insurance Rate Spike

A new kitchen can do more than transform the function and aesthetic appeal of your home— it might also change your property’s risk profile and, in turn, what you pay for home insurance. 

“Due to increased labor and material costs, the price of renovating a kitchen has spiked over the past three to five years. And when you upgrade this room, you’re essentially asking your insurance company to protect an asset that has increased in value,” explains Travis Hodges, managing director at VIU by HUB in Saint Simons Island, GA.

Before you move forward with your kitchen project, be mindful of the upgrades you choose. 

Otherwise you could be caught off guard by a higher home insurance bill or gaps in coverage. 

How some upgrades can help you save on home insurance

Not all kitchen upgrades are created equal.

Some improvements can make your home more resilient and as a result, lower your home insurance rates.

“You could see savings by installing safety features like water sensors or smart smoke and heat detectors, replacing aging appliances with newer models that meet current safety standards, and upgrading range hoods to improve ventilation and reduce grease buildup,” Hodges says.

Ideally, you’d prioritize improvements that will reduce risk in your kitchen. Think impact-resistant windows, hurricane-rated doors and new plumbing fixtures as these can all protect your home from weather-related losses. 

When it comes to gas vs. electric appliances, there's no universal insurance preference. 

“The better consideration is replacing older appliances with newer models that have updated safety features,” says Hodges.

As for savings potential, there's no one-size-fits-all answer. 

“It's hard to determine what you might save because there are so many variables that impact the calculated rate and the scope of your remodel matters as well,” says Hodges. 

Tips to keep your premiums from rising 

At the end of the day, an insurer won't be upset if you renovate your kitchen, but certain upgrades can change your home's risk profile or replacement cost, which may affect your premium. 

“High-end finishes, for example may increase your home's replacement value, but you may also receive discounts for installing upgraded appliances that are less likely to cause water damage or create fire hazards,” Hodges explains. 

So, before starting a kitchen reno, be proactive and do your research. 

“It's a good idea to consult with an insurance expert early on in the process to weigh the upfront cost and long-term savings potential of these upgrades and understand which will have the greatest impact on your insurance rates,” Hodges adds.

This can allow you to avoid unforeseen premium hikes and plan your project accordingly.

Also, remember your insurance company will only pay up to the coverage limits you purchased. 

If the cost to rebuild your home with an updated kitchen is more expensive than the limit you initially chose, you may find yourself underinsured and responsible for the remainder of the replacement costs on your own. And this is an even greater financial risk than a premium hike. 

“Notifying your insurer early will help make sure that your policy covers any increases in home value due to the renovations. They can let you know if additional coverage changes are needed,” Hodges explains. 

Just remember, you’re not stuck with your current policy.

A renovation is a good time to review your coverage and compare quotes across insurers. 

“I would advise working with an insurance expert who can offer personalized, unbiased advice and help you shop around for the best options. They can help you determine your unique coverage needs, ensuring you have the right level of protection while managing your costs,” Hodges explains 

The general rule of thumb is to report any renovation or addition to your insurance company as soon as plans are set, and definitely before any demolition or construction starts. 

“That gives your insurer the opportunity to make sure your home is adequately insured during and after the project, account for any increase in replacement cost, and let you know if any coverage changes are recommended,” adds Hodges.