Homeowners Insurance

Worthwhile Renovations to Increase the Value of Your Home

Learn how to maximize the value of your home through various renovations, while abiding to proper building codes.

Renovations are a headache and can be expensive -- so if you are going to undertake them, it is important to get your money’s worth and make sure they are done correctly. Be sure to follow proper building codes and respective local permit procedures when it comes to renovations, whether you want to live in your home for the next 30 years and enjoy personalized amenities, or are looking to put your house on the market. Conducting renovations without appropriate permits can result in fines, the need to completely redo work, as well as problems when it comes time to sell.

Also, speak with your home insurance provider to determine if you need updated coverage limits to match the new replacement costs for those fancy granite countertops and that must-have sunken whirlpool tub. Alert them to the project in the early planning stages. This can help protect you, and the investment made in the project, during construction and beyond.

Interested in renovating a specific space?

Kitchen is king

Even those people who eat take-out most nights dream of a beautiful kitchen, cozy family dinners around the table or entertaining friends. A nice space for entertaining is a powerful draw when people are in the market to buy a home.

Kitchen remodels can return as much as 62% on your payout, according to the 2019 Cost vs. Value Report conducted by Remodeling.

Granite countertops seem to be a deal-maker for many people, so if you have yet to replace your old Formica counters, get on it. Storage space is important too. Many people buy lots of kitchen gadgets, and even if they’re merely “aspirational,” they need a place to live.

Just repainting the kitchen can make a big difference. If you have spent a lot of time cooking, the walls can be dingy from smoke and grease. Although it’s something you may not notice, it can turn off a prospective buyer.

Thinking of making renovations to your home’s nucleus? Keep in mind that the large and more drastic kitchen changes often require building permits.

To make these kitchen renovations, are permits required?

Building Permits Required?Renovation Project
RequiredRemoving a load-bearing wall to give that open concept look
Possibly requiredMoving a sink, as this may impact relevant plumbing lines
Often not requiredUpdating the kitchen countertops

Bathroom

Remember when you were in college and had to share a bathroom with one, maybe more, roommates? So does everyone else, and they don’t want to do it when they’re adults who own a home. If your home has only one bathroom, adding another will make a big difference to your morning routine.

Adding or remodeling a bathroom can recoup up to 80% of your investment. People want porcelain tiles on the walls and floors, an upgraded shower stall with multiple shower heads, and lots of counter space, with two sinks if you have room for it all.

To make these bathroom renovations, are permits required?

Building Permits Required?Renovation Project
RequiredAdding a shower to that downstairs powder room
Possibly requiredUpdating the vanity with a double sink - depending if it entails new plumbing supply or not
Often not requiredFixture replacements, such as toilet

Backyard retreat

Homeowners and potential buyers alike also dream of outdoor entertaining. Adding a deck to your home can provide a return on investment of 73%. A patio, while still desirable, adds less return, between 30-60%, according to Inman, a real-estate news publication.

You might think most buyers would like to do all this outdoor entertaining poolside, but a pool actually adds little value to a home. Pools do require a lot of upkeep, and some people don’t want to be bothered. Also, if your home is in a neighborhood that appeals to young families, some would prefer not to have a pool because of the danger it poses to young children.

To make these outdoor renovations, are permits required?

Building Permits Required?Renovation Project
RequiredAdding a deck, as it has structural implications to your home
Possibly requiredBuilding a tree house; requirements vary based on size
Often not requiredInstalling a fence, specifically one under 6 ft

Curb appeal

The inside of your home might be renovated from top to bottom, but if the outside looks unappealing, you might not even get potential buyers in the front door to marvel over (and pay top dollar for) your fancy upgrades.

Little things do matter, and that’s good news for you because the little things are cheaper and easier to execute. Believe it or not, one of the best ways to improve your home’s value is to get a new door. Garage door replacement adds an average of 97.5% of what it cost you to the value of your home, according to 2019 Remodeling Cost vs. Value Report.

Is your home looking a bit drab on the outside? Rent a power washer for about $75 a day. This simple improvement can add as much as $10,000 to $15,000 to the value of your home, according to the National Association of Realtors (NAR).

Landscaping is an important part of curb appeal. It can add as much as 28% to the home’s value, says NAR. Strategically-planted trees not only beautify your home, but they can help cut energy costs too.

Plants aren’t the only aspect of landscaping. Outdoor lighting is valuable to prospective buyers too, and it’s another improvement that can save you, or the new owners money. Lighting reduces the risk of break-ins, and some homeowner's insurance policies will give you a discount for installing it.

To make these curb appeal renovations, are permits required?

Building Permits Required?Renovation Project
RequiredRoofing update that alters the roofline and structure of the house
Possibly requiredCutting down a tree on your property will differ based on tree diameter and type
Often not requiredPainting front door - though check with your Homeowners Association for approval if part of one

Beyond cosmetic

It’s nice to walk into a beautiful home, but there are some renovations that are well worth the money that have nothing to do with aesthetics. Installing central air in a 2,400-square foot home can cost around $10,000, but it can add as much as 10% to 20% to your home’s value, reported Real Simple.

It can also save you energy costs long term, as central air is less costly to run than window units and doesn’t have to be removed and stored after each summer. Plus, central air units don’t obstruct the view of all that beautiful landscaping the way that bulky window units do.

Peace of mind goes a long way to making your home more attractive to buyers. Having to replace the roof a few years after moving in is not on any buyer’s wish list. Because no one wants to deal with that, a new roof can add a lot of value to your home, between 15% and 40%, says roofing company Signature Exteriors. It can also increase your home’s energy efficiency.

Likely, any major project that deals with the internal integrity of your home will require building permits.

To make these internal renovations, are permits required?

Building Permits Required?Renovation Project
Permit requiredInstalling new furnace, hot water heater and air conditioning
Permit RequiredAny work dealing with the sewer line
Permit RequiredAdding or updating electrical wiring

How do home renovations impact home insurance?

Depending on the specifics of your home renovation, home insurance may either increase or decrease. It is important to understand the home insurance implications prior to renovations taking place and plan for the cost fluctuation.

Renovations that may increase home insurance costs:

Renovation ProjectBuilding Permits Required?Why?
Swimming poolsPermit requiredInstallation of a pool could increase the risks associated with your home, as the owner of a pool is liable for anyone who uses it, whether they have permission or not.
Home additionPermit requiredBuilding onto the house increases the square footage, naturally adding more space and value to your home. With that, your insurance policy needs to reflect that alteration.
New appliancesPermit is likely not required if installed in the same location. Permit is likely required if moving electrical, gas or plumbing linesUpgrading to expensive appliances, such as a high valued stove, is an investment in your property that you want protected should disaster strike and you need to rebuild to replace those items.

Renovations that may decrease home insurance costs:

Renovation ProjectBuilding Permits Required?Why?
RoofPossibly required based on extent of workInsurance companies see a lot of claims around roofing, whether it is destroyed from a natural disaster or just starts leaking. Having a newer roof, equipped with the latest roofing material is far less risky than an older roof in the eyes of insurers.
Smart safety featuresPermit is likely not requiredThe installation of safety features, like smart smoke detectors, or fire extinguishers, could result in an insurance discount if they connect with your insurance company and inform them that the system is working.

We recommend talking to your insurance agent, builder, contractor, real estate agent and local permit office to confirm exact policies in your area. Happy renovating!

Callie McGill

Callie is a Content Marketing Research Analyst at ValuePenguin, with a focus on insurance.

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.