These 3 Home Renovations Could Raise Your Homeowners Insurance Costs

When you purchase a home, you have to factor more than just your monthly mortgage payments into your budget. You also have to account for added costs like property taxes, maintenance, repairs, and insurance.

The average cost of homeowners insurance for a 12-month policy among insurers in Progressive's network ranges from $999 ($83 per month) to $1,655 ($138 per month) for policies effective on or after April 1, 2020. But the amount you pay for homeowners insurance will depend on the type of property you own and where you live.

Now in the course of living in your home, you may decide to sink money into certain renovations that make it a more comfortable or enjoyable space. But know that these renovations in particular could result in paying higher homeowners insurance premiums.

1. Installing a swimming pool

There are numerous reasons why a swimming pool might add to your homeowners insurance costs. First, any addition of value to your home adds to its replacement cost, so that alone might drive your premiums upward.

But also, a pool has the potential to be a big hazard. You may need to increase your liability coverage in case there's an accident on your property related to your pool. And that accident doesn't necessarily have to happen in the water. A slippery pool deck could result in a broken bone, or water might leak out of your pool and cause damage.

If you're going to install a pool, consider adding safety measures like a locking fence around it to minimize the potential for injuries. Some municipalities may require you to do this anyway.

2. Putting on an addition

An addition gives you the benefit of more living space, without having to move. But because you're getting added square footage and are increasing the value of your home, you should expect the cost of your insurance to rise.

Think about it this way. If your three-bedroom home were to be destroyed, your insurance company would have to fork over a certain amount of money to rebuild it. If you now have two more bedrooms following an addition, there's a higher cost to rebuild -- so it could easily result in higher premiums.

3. Finishing a basement

Unlike an addition, when you finish a basement, you don't add space to your home so much as take existing space and make it more usable. But still, you're adding value to your property, which makes rebuilding it a more expensive prospect. So because of this, you should expect your insurance costs to rise.

Also, you may need to buy separate flood insurance if you're worried about water damage in your basement following weather events. Many standard homeowners insurance policies do not cover flood damage.

If you're finishing your basement, you may want to install a sump pump to help prevent water damage. A French drain is another good option to discuss with your contractor.

These are only three of many renovations that could result in higher homeowners coverage. Before you make any improvements to your home, contact your insurer, explain the scope of the project, and ask for an estimate of how it will impact your premium rates.

Your insurer may not be able to give you an exact answer until the work is completed. But this way, you'll at least get a sense of what to expect before you start paying for the work you're looking to do. And if the potential rise in your homeowners insurance costs is more than you can afford, it might sway you to hold off on renovations or consider lower-impact changes to your living space.