Home improvements to lower insurance cost

Although there are differences by location, here are some common home improvements that can mean a discount on your home insurance.

Renovating or replacing your roof

Many home insurance companies will offer a discount if you have a new roof installed; some may discount any new roof, while others will provide a discount for installing hail or wind-resistant shingles or choosing fire-resistant materials. 

Either way, a new roof is a good investment, as home insurance coverage for your roof may be difficult to obtain if it’s over 20 years old.

Upgrading your wiring or plumbing

In an older home, outdated wiring or plumbing are risky. Home insurance companies will often give you a discount if you upgrade either system to a new, up-to-code version. New wiring reduces the risk of fire, while new plumbing can prevent water damage.

Installing a monitored security system

A security system home insurance discount is usually offered for a monitored system. That means that the company that installed the system monitors it for alarms and will send the police or fire department if something goes wrong. 

The quick response of emergency services when something goes wrong can greatly reduce the damage, saving home insurance companies from big claims.

“If a home is located in a neighborhood that has had a high amount of burglaries, installing a security system could reduce the overall premium significantly,” says McKenzie.

Investing in smart home technology

Although this is a more recent discount and not all companies offer it, smart home technology discounts on home insurance reward you for much the same thing as a monitored security system. Because smart homes provide early notice of a problem, damage can be reduced or prevented.

For example, some technology can monitor your electrical system for fire risk.

Adding wind or hail-resistant upgrades

Wind and hail can cause very expensive damage, so any upgrades you make to your home that reduce or prevent this type of damage can mean a discount on home insurance. This includes:

  • Hurricane shutters
  • Hail-resistant shingles
  • Hail-resistant siding

It’s worth noting that some of these upgrades can not only reduce your insurance rates, they can also make your home more insurable. Insurance companies prefer to take on homes where the risk of a claim has been reduced.

Home improvement discounts to lower insurance cost

Here’s a look at average discounts from top companies for various home improvements.

Home insurance discounts for electrical upgrades

Here is how much an electrical upgrade to your home could save you on home insurance.

Home insurance discount for electrical upgrades
CompanyAverage rateDiscount $Discount %
Farmers Insurance$3,238$882%
State Farm$2,274$30112%
American Family$2,388$39214%

Home insurance discounts for heating upgrades

Here’s how much you could save on home insurance if you upgrade your heating system.

Home insurance discounts for heating upgrades
CompanyAverage rateDiscount $Discount %
Farmers Insurance$2,843$382%
State Farm$2,432$1476%

Home insurance discounts for plumbing upgrades

Here’s how much you could save on home insurance when you upgrade the plumbing.

Home insurance discounts for plumbing upgrades
CompanyAverage rateDiscount $Discount %
Farmers Insurance$2,921$1044%
State Farm$2,505$743%

Home insurance discounts for roof upgrades

Here are the average home insurance discounts for a roof upgrade.

Home insurance discounts for roof upgrades
CompanyAverage rateDiscount $Discount %
Farmers Insurance$2,799$1906%
American Family$2,233$1735%

What home improvements can increase your insurance cost?

Not all upgrades to your home mean a discount. Some home improvements, changes and renovations can actually increase your insurance rates. 

Upgrading or enlarging the structure

Whether you add square footage, add a deck or patio or improve the inside with new floors cabinets or countertops, anything that makes your home more valuable will likely increase your insurance rates to cover the cost of reconstruction in a claim.

Adding a swimming pool

Not only does a swimming pool add to your home's value, it also adds risk. The potential for a drowning accident means home insurance companies will charge you more if you install a pool in your yard.

Starting a home business

Much of your home business operation isn’t covered by home insurance, but if you do start a business out of your home, you’ll need to notify your home insurance company. You will probably be able to add an endorsement to cover business equipment and liability, which will raise your rates. But don’t skip it; you won’t be covered without it.

Home insurance FAQs

Does homeowners insurance cover renovation?

Maybe. Depending on the scope of the renovation, you may need additional coverage. Talk to your contractor about their insurance and also discuss the possibility of needing builder’s risk insurance with your home insurance company.

Should I increase my home insurance after renovation?

Yes. Renovations change the reconstruction cost of your home on which the dwelling coverage is based. To make sure you’re properly insured, talk to your insurance company about increasing that coverage after the work is done.

Do I need to tell home insurance about building work?

It depends. Minor renovations, like painting, don’t require a call to the home insurance company. For major renovations, it’s a good idea to call before work begins and again when it’s done to check your replacement cost.