What should homeowners do after making significant renovations?

After making significant renovations, homeowners should notify their insurance company to adjust coverage. This step is crucial because renovations can increase the value of the home, and the existing insurance policy may not cover the new value, potentially leaving the homeowner underinsured. Additionally, renovations may also change the risk profile of the property, which could require an update on the type of coverage needed.

For instance, if a homeowner adds a new room, installs a swimming pool, or upgrades plumbing and electrical systems, the replacement cost of the home could increase significantly. Notifying the insurance company allows them to reassess the property and provide appropriate coverage that corresponds to its new value and risks, ensuring adequate financial protection in the event of a loss.

While adjusting a personal budget is certainly wise after significant expenditures, and requesting a full appraisal can provide insights into the home's value, these actions do not directly address the need for appropriate insurance coverage, which is essential for protecting the homeowner's investment. Notifying the mortgage lender may be necessary in some cases but is secondary to ensuring the property is properly insured.